Le Lézard
Classified in: Business
Subjects: EARNINGS, Photo/Multimedia, Conference Call, Webcast

Soho House & Co Inc. Announces First Quarter 2024 Results


Soho House & Co Inc. (NYSE: SHCO) ("SHCO," "Company," "we" or "our"), a global membership platform that connects a vibrant, diverse, and global group of members, today announced results for the first quarter ended March 31, 2024.

First Quarter 2024 Highlights

"Our first quarter results are testament to the strong appeal of Soho House globally, with Soho House membership growing 17% year-on-year and our waitlist surpassing the 100,000 mark for the first time," said Andrew Carnie, CEO of Soho House & Co.

"Total revenues grew 3% in the quarter, and we have seen steady improvement in underlying trends since the start of the year. This, coupled with continued strong execution, gives us confidence to raise the midpoint of our Adjusted EBITDA guidance."

"I'd like to thank our teams for their passion and hard work, and members around the world for their continued loyalty."

Summary of Financial Results for the Quarter Ended March 31, 2024

 

For the 13 Weeks Ended

 

(in thousands, except shares and per share amount unless otherwise noted)

March 31, 2024

 

 

April 2, 2023

 

Total revenues

$

263,146

 

 

$

255,209

 

Membership revenues

 

100,191

 

 

 

83,248

 

In-House revenues

 

110,401

 

 

 

116,078

 

Other revenues

 

52,554

 

 

 

55,883

 

Operating income (loss)

 

(25,083

)

 

 

962

 

House-Level Contribution(1)

 

49,444

 

 

 

46,718

 

House-Level Contribution margin (%)(1)

 

25

%

 

 

24

%

Other Contribution(1)

 

8,106

 

 

 

8,138

 

Other contribution margin (%)(1)

 

13

%

 

 

13

%

Net income (loss) attributable to SHCO Inc.

 

(46,040

)

 

 

(15,952

)

Adjusted EBITDA(1)

 

19,300

 

 

 

20,127

 

Adjusted EBITDA margin (%)(1)

 

7

%

 

 

8

%

Weighted average Class A and Class B Shares outstanding (basic)

 

195,710,720

 

 

 

195,421,792

 

Basic and diluted income (loss) per share

$

(0.24

)

 

$

(0.08

)

(1)

See "Non-GAAP Financial Measures" for reconciliations of Non-GAAP measures to GAAP measures.

The following selected items listed below are not added back in Adjusted EBITDA:

 

For the 13 Weeks Ended

 

(in thousands)

March 31, 2024

 

April 2, 2023

 

Pre-opening expenses (1)

$

5,754

 

 

$

4,994

 

Non-cash rent

 

833

 

 

 

2,776

 

Deferred registration fees, net

 

(467

)

 

 

(461

)

We delivered the following highlights against our strategic priorities in the first quarter

1. Grow and Enhance Membership

2. Operational Excellence to Drive Profitability

Membership Summary for the Quarter Ended March 31, 2024

 

As of

 

 

March 31, 2024

 

 

April 2, 2023

 

Total Members

 

261,571

 

 

 

237,961

 

Soho House

 

198,021

 

 

 

168,685

 

Frozen members

 

10,052

 

 

 

2,333

 

Soho Friends

 

57,432

 

 

 

62,912

 

Soho Works

 

6,118

 

 

 

6,364

 

Active App Users

 

204,405

 

 

 

175,323

 

 

 

 

 

 

 

 

 

As of

 

 

 

March 31,
2024

 

 

April 2,
2023

 

Number of Soho Houses

 

 

43

 

 

 

41

 

North America

 

 

16

 

 

 

14

 

United Kingdom

 

 

13

 

 

 

13

 

Europe/RoW

 

 

14

 

 

 

14

 

Number of Soho House Members

 

 

198,021

 

 

 

168,685

 

North America

 

 

72,692

 

 

 

61,885

 

United Kingdom

 

 

71,835

 

 

 

63,285

 

Europe/RoW

 

 

42,678

 

 

 

36,031

 

All Other

 

 

10,816

 

 

 

7,484

 

Number of Other Members

 

 

63,550

 

 

 

69,276

 

North America

 

 

17,037

 

 

 

18,894

 

United Kingdom

 

 

38,114

 

 

 

41,756

 

Europe/RoW

 

 

8,399

 

 

 

8,626

 

Number of Total Members

 

 

261,571

 

 

 

237,961

 

Number of Active App Users

 

 

204,405

 

 

 

175,323

 

Memberships

Financing

Updated Fiscal 2024 Guidance

The following forward-looking statements reflect our current expectations as of today, May 10, 2024:

 

 

 

 

 

 

Old Fiscal 2024 Guidance

New Fiscal 2024 Guidance

Total Soho House Members

 

>210,000

>210,000

Membership revenues

 

$405m ? $415m

$405m ? $415m

Total revenues*

 

$1,200m ? $1,250m

$1,200m ? $1,250m

Adjusted EBITDA**

 

$155m ? $165m

$157m ? $165m

*Assumes no material FX impact, reflecting bank estimates

**Without adding back pre-opening costs, non-cash rent and deferred registration fees of ~$25-30m combined for fiscal 2024 as a whole

Conference Call and Webcast:

A conference call and live webcast will be hosted to discuss these results on Friday, May 10, 2024 at 9am EST / 1pm BST.

A live broadcast and accompanying presentation will be available at www.sohohouseco.com.

To listen to the live conference call via telephone, please dial:

USA

New York (646) 307 1963
USA & Canada Toll-Free (800) 715 9871

UK

London +44 (0)20 3481 4247
UK Toll-Free +44 (0)800 260 6466

Conference ID 6397190
A replay of the webcast will be available on our website following the call for up to 90 days.

Non-GAAP Financial Measures

This presentation contains certain financial measures, including Adjusted EBITDA, House-Level Contribution and Margin, Other Contribution and Margin, Net Debt and certain financial measures presented on a Constant Currency basis that are not required by, or presented in accordance with, accounting principles generally accepted in the United States of America (?GAAP'). We refer to these measures as ?non-GAAP financial measures.' We use these non-GAAP financial measures when planning, monitoring and evaluating our performance. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for revenues or net income (loss), in each case as recognized in accordance with GAAP. In addition, other companies may calculate one or more of these measures differently, which reduces the usefulness of any such measure as a comparative measure. See below for a definition of these non-GAAP financial measures and a reconciliation to the most directly comparable GAAP financial measures.

We provide earnings guidance using both GAAP and non-GAAP financial measures. A reconciliation of the Company's Adjusted EBITDA guidance to the most directly comparable GAAP financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including adjustments that are made for future changes in foreign exchange and the other adjustments reflected in our reconciliation of historical non-GAAP financial measures, the amounts of which, could be material.

The information in this presentation should be read in conjunction with our Annual and Quarterly Reports on Form 10-K and Form 10-Q and other information that we file with the SEC. The reconciliations of non-GAAP financial measures are an integral part of the information presented herein. You can access these documents on our website, www.sohohouseco.com, free of charge, as well as any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The information contained on our website is not incorporated by reference into, and should not be considered a part of, this presentation.

In addition, the SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC at www.sec.gov.

The non-GAAP financial measures we use herein are defined by us as follows:

ADJUSTED EBITDA. Adjusted EBITDA is a supplemental measure of our performance. Adjusted EBITDA is defined as Net income (loss) before Depreciation and amortization, Interest expense, net, Income tax (expense) benefit, adjusted to take account of the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These other items include, but are not limited to, Gain (loss) on sale of property and other, net, Share of loss (profit) from equity method investments, Foreign exchange, Share of equity method investments adjusted EBITDA, Share-based compensation expense and other applicable items. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses (income) that do not relate to ongoing business performance.

HOUSE-LEVEL CONTRIBUTION AND MARGIN. House-Level Contribution is defined as House Revenues less In-House operating expenses, which includes expense items such as food and beverage costs, labor costs, variable overheads and fixed costs, such as rent. It does not reflect the impact of depreciation, amortization, impairment, gain or loss on sale of property, general and administrative expenses or other applicable items. House-Level Contribution Margin is defined as House-Level Contribution as a percentage of our House Revenues and is a key determinant of our performance and profitability and our return on the investment we make in each of our Houses. Given that all costs associated with providing our members with the Soho House experience, including the costs associated with maintaining our Houses and providing services to members while in the Houses, are included in In-House operating expenses, we use House Revenues (inclusive of House Membership Revenues) in calculating House-Level Contribution and House-Level Contribution Margin to assess the overall profitability of our Houses. Accordingly, our management considers House-Level Contribution and House-Level Contribution Margin to be an important management measure to evaluate the performance of each House, and growth in aggregate House-Level Contribution allows us to leverage our general and administrative costs and improve overall profitability.

OTHER CONTRIBUTION AND MARGIN. Other Contribution is defined as Other revenues plus Non-House Membership Revenues less Other operating expenses, which includes expense items not related to the operation of Houses, such as labor costs, variable overheads and fixed costs, such as rent. It does not reflect the impact of depreciation, amortization, impairment, gain or loss on sale of property, general and administrative expenses, pre-opening expenses, foreign exchange gain/loss, Share-based compensation expense and other applicable items. Other Contribution Margin defined as Other Contribution as a percentage of our Other revenues and is a key determinant of our performance and profitability and our return on the investment in our non-House business. Our management considers Other Contribution and Contribution Margin to be an important management measure.

NET DEBT. Net Debt reflects the total debt, comprising long-term debt, property mortgage loans and related party loans, less cash, cash equivalents and restricted cash. Net Debt is an important measure to monitor leverage and evaluate the balance sheet. A limitation associated with using Net Debt is that it subtracts Cash and cash equivalents and Restricted cash and therefore may imply that there is less Company debt than the most comparable GAAP measure indicates. Management believes that investors may find it useful to monitor leverage and evaluate the balance sheet.

CONSTANT CURRENCY. Some of our financial and operational data that we disclose in this release is presented on a ?constant currency' basis to isolate the effect of currency changes during the period. Where we refer to a measure being calculated in ?constant currency,' we are calculating the dollar change and the percentage change as if the exchange rate that is being used in the current period was in effect for all prior periods presented. We believe that this calculation provides a more meaningful indication of actual year over year performance and eliminates any fluctuations from currency exchange rates.

While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for revenues or net income (loss), in each case as recognized in accordance with GAAP. In addition, other companies may calculate one or more of these measures differently, which reduces the usefulness of any such measure as a comparative measure.

A reconciliation of Net income (loss) to Adjusted EBITDA for the 13 weeks ending March 31, 2024 and April 2, 2023 is set forth below:

 

For the 13 Weeks Ended

 

 

Percent Change

 

 

March 31,
2024

 

 

April 2,
2023

 

 

Actuals

 

 

Constant
Currency(1)

 

 

Actuals

 

 

 

 

 

(Unaudited, dollar amounts in thousands)

 

Net income (loss)

$

(46,339

)

 

$

(16,016

)

 

n/m

 

 

n/m

 

Depreciation and amortization

 

25,744

 

 

 

24,464

 

 

 

5

%

 

 

2

%

Interest expense, net

 

21,199

 

 

 

18,701

 

 

 

13

%

 

 

9

%

Income tax benefit

 

499

 

 

 

(171

)

 

n/m

 

 

n/m

 

EBITDA

 

1,103

 

 

 

26,978

 

 

 

(96

)%

 

 

(96

)%

(Gain) loss on sale of property and other, net

 

(65

)

 

 

(681

)

 

 

90

%

 

 

91

%

Share of income of equity method investments

 

(377

)

 

 

(871

)

 

 

57

%

 

 

58

%

Foreign exchange (gain) loss, net (2)

 

5,481

 

 

 

(13,013

)

 

n/m

 

 

n/m

 

Share of equity method investments adjusted EBITDA

 

1,740

 

 

1,868

 

 

 

(7

)%

 

 

(10

)%

Share-based compensation expense

 

8,039

 

 

5,846

 

 

 

38

%

 

 

33

%

Expenses related to shareholder activism (3)

 

1,885

 

 

?

 

 

n/m

 

 

n/m

 

Expenses related to evaluation of certain strategic transactions (4)

 

1,494

 

 

 

?

 

 

n/m

 

 

n/m

 

Adjusted EBITDA

$

19,300

$

20,127

 

 

 

(4

)%

 

 

(7

)%

1.

 

See "Non-GAAP Financial Measures" for an explanation of our constant currency results.

2.

 

Primarily driven by foreign exchange volatility impacting our non-USD debt and working capital.

3.

 

Primarily relating to professional service fees related to shareholder activism response

4.

 

Primarily relating to third party advisory expenses incurred by the Company's independent special committee in respect of the evaluation of certain strategic transactions

A reconciliation of Operating income (loss) to House-Level Contribution & Other Contribution for the 13 weeks ending March 31, 2024 and April 2, 2023 is set forth below:

 

For the 13 Weeks Ended

 

 

 

 

 

 

 

 

 

 

 

March 31,
2024

 

 

April 2,
2023

 

 

Change %

 

 

April 3, 2023
Constant
Currency

 

 

Constant
Currency

Change %

 

 

Actuals

 

 

 

 

 

 

 

 

(Unaudited, dollar amounts in thousands)

 

Operating income (loss)

$

(25,083

)

 

$

962

 

 

n/m

 

 

$

(2,899

)

 

n/m

 

General and administrative

 

34,372

 

 

 

30,574

 

 

 

12

%

 

 

31,675

 

 

 

9

%

Pre-opening expenses

 

5,754

 

 

 

4,994

 

 

 

15

%

 

 

5,174

 

 

 

11

%

Depreciation and amortization

 

25,744

 

 

 

24,464

 

 

 

5

%

 

 

25,345

 

 

 

2

%

Share-based compensation

 

8,039

 

 

 

5,846

 

 

 

38

%

 

 

6,057

 

 

 

33

%

Foreign exchange (gain) loss, net

 

5,481

 

 

 

(13,013

)

 

n/m

 

 

 

(13,482

)

 

n/m

 

Other, net

 

3,243

 

 

 

1,029

 

 

n/m

 

 

 

1,066

 

 

n/m

 

Non-House membership revenues

 

(9,519

)

 

 

(8,636

)

 

 

(10

)%

 

 

(8,947

)

 

 

(6

)%

Other revenues

 

(52,554

)

 

 

(55,883

)

 

 

6

%

 

 

(57,291

)

 

 

8

%

Other operating expenses

 

53,967

 

 

 

56,381

 

 

 

(4

)%

 

 

58,412

 

 

 

(8

)%

House-Level Contribution

$

49,444

 

 

$

46,718

 

 

 

6

%

 

$

45,110

 

 

 

10

%

Operating income (loss) margin

 

(10

)%

 

 

0

%

 

 

 

 

 

0

%

 

 

 

House-Level Contribution Margin

 

25

%

 

 

24

%

 

 

 

 

 

24

%

 

 

 

 

For the 13 Weeks Ended

 

 

 

 

 

 

 

 

 

 

 

March 31,
2024

 

 

April 2,
2023

 

 

Change %

 

 

April 3, 2023
Constant Currency

 

 

Constant Currency
Change %

 

 

Actuals

 

 

 

 

 

 

 

 

(Unaudited, dollar amounts in thousands)

 

Operating income (loss)

$

(25,083

)

 

$

962

 

 

n/m

 

 

$

(2,899

)

 

n/m

 

General and administrative

 

34,372

 

 

 

30,574

 

 

 

12

%

 

 

31,675

 

 

 

9

%

Pre-opening expenses

 

5,754

 

 

 

4,994

 

 

 

15

%

 

 

5,174

 

 

 

11

%

Depreciation and amortization

 

25,744

 

 

 

24,464

 

 

 

5

%

 

 

25,345

 

 

 

2

%

Share-based compensation

 

8,039

 

 

 

5,846

 

 

 

38

%

 

 

6,057

 

 

 

33

%

Foreign exchange loss, net

 

5,481

 

 

 

(13,013

)

 

n/m

 

 

 

(13,482

)

 

n/m

 

Other, net

 

3,243

 

 

 

1,029

 

 

n/m

 

 

 

1,066

 

 

n/m

 

House membership revenues

 

(90,672

)

 

 

(74,612

)

 

 

(22

)%

 

 

(75,859

)

 

 

(20

)%

In-House revenues

 

(110,401

)

 

 

(116,078

)

 

 

5

%

 

 

(118,409

)

 

 

7

%

In-House operating expenses

 

151,629

 

 

 

143,972

 

 

 

5

%

 

 

149,158

 

 

 

2

%

Total Other Contribution

$

8,106

 

 

$

8,138

 

 

 

(0

)%

 

$

7,826

 

 

 

4

%

Operating income (loss) margin

 

(10

)%

 

 

0

%

 

 

 

 

 

0

%

 

 

 

Other Contribution Margin

 

13

%

 

 

13

%

 

 

 

 

 

13

%

 

 

 

Condensed unaudited Consolidated Statements of Operations for the 13 weeks ended March 31, 2024 and April 2, 2023:

 

For the 13 Weeks Ended

 

(in thousands, except for per share data)

March 31, 2024

 

 

April 2, 2023

 

Revenues

 

 

 

 

 

 

 

Membership revenues

$

 

100,191

 

 

$

 

83,248

 

In-House revenues

 

 

110,401

 

 

 

 

116,078

 

Other revenues

 

 

52,554

 

 

 

 

55,883

 

Total revenues

 

 

263,146

 

 

 

 

255,209

 

Operating expenses

 

 

 

 

 

 

 

In-House operating expenses

 

 

(151,629

)

 

 

 

(143,972

)

Other operating expenses

 

 

(53,967

)

 

 

 

(56,381

)

General and administrative expenses

 

 

(34,372

)

 

 

 

(30,574

)

Pre-opening expenses

 

 

(5,754

)

 

 

 

(4,994

)

Depreciation and amortization

 

 

(25,744

)

 

 

 

(24,464

)

Share-based compensation

 

 

(8,039

)

 

 

 

(5,846

)

Foreign exchange gain (loss), net

 

 

(5,481

)

 

 

 

13,013

 

Other, net

 

 

(3,243

)

 

 

 

(1,029

)

Total operating expenses

 

 

(288,229

)

 

 

 

(254,247

)

Operating income (loss)

 

 

(25,083

)

 

 

 

962

 

Other (expense) income

 

 

 

 

 

 

 

Interest expense, net

 

 

(21,199

)

 

 

 

(18,701

)

Gain (loss) on sale of property and other, net

 

 

65

 

 

 

 

681

 

Share of income (loss) of equity method investments

 

 

377

 

 

 

 

871

 

Total other expense, net

 

 

(20,757

)

 

 

 

(17,149

)

Income (loss) before income taxes

 

 

(45,840

)

 

 

 

(16,187

)

Income tax (expense) benefit

 

 

(499

)

 

 

 

171

 

Net income (loss)

 

 

(46,339

)

 

 

 

(16,016

)

Net income (loss) attributable to noncontrolling interests

 

 

299

 

 

 

 

64

 

Net income (loss) attributable to Soho House & Co Inc.

$

 

(46,040

)

 

$

 

(15,952

)

Net income (loss) per share attributable to Class A and Class B common stock

 

 

 

 

 

 

 

Basic and diluted

$

 

(0.24

)

 

$

 

(0.08

)

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic and diluted

 

 

195,711

 

 

 

 

195,422

 

Condensed unaudited Consolidated Statements of Cash flows for the 13 weeks ended March 31, 2024 and April 2, 2023:

 

For the 13 Weeks Ended

 

(in thousands)

March 31, 2024

 

 

April 2, 2023

 

Cash flows from operating activities

 

 

 

 

 

Net income (loss)

$

(46,339

)

 

$

(16,016

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

Depreciation and amortization

 

25,744

 

 

 

24,464

 

Non-cash share-based compensation

 

7,336

 

 

 

5,677

 

Deferred tax expense (benefit)

 

(393

)

 

 

(683

)

Gain (loss) on sale of property and other, net

 

(65

)

 

 

(681

)

Share of (income) loss of equity method investments

 

(377

)

 

 

(871

)

Amortization of debt issuance costs

 

703

 

 

 

762

 

PIK interest (settled), net of non-cash interest

 

9,614

 

 

 

9,073

 

Distributions from equity method investees

 

?

 

 

 

159

 

Foreign exchange (gain) loss, net

 

5,481

 

 

 

(13,013

)

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(1,046

)

 

 

(1,612

)

Inventories

 

(1,816

)

 

 

1,373

 

Operating leases, net

 

1,749

 

 

 

(1,125

)

Other operating assets

 

(26,478

)

 

 

(18,385

)

Deferred revenue

 

(4,747

)

 

 

297

 

Accounts payable and accrued and other liabilities

 

38,122

 

 

 

(1,907

)

Net cash used in operating activities

 

7,488

 

 

 

(12,488

)

Cash flows from investing activities

 

 

 

 

 

Purchase of property and equipment

 

(21,004

)

 

 

(12,010

)

Proceeds from sale of assets

 

?

 

 

 

978

 

Purchase of intangible assets

 

(4,587

)

 

 

(4,674

)

Net cash used in investing activities

 

(25,591

)

 

 

(15,706

)

Cash flows from financing activities

 

 

 

 

 

Repayment of borrowings

 

(312

)

 

 

(202

)

Payment for debt extinguishment costs

 

?

 

 

 

?

 

Proceeds from borrowings

 

?

 

 

 

?

 

Payments for debt issuance costs

 

?

 

 

 

?

 

Principal payments on finance leases

 

(67

)

 

 

(39

)

Principal payments on financing obligation

 

?

 

 

 

?

 

Distributions to noncontrolling interest

 

?

 

 

 

(390

)

Contributions from noncontrolling interest

 

?

 

 

 

?

 

Senior convertible preference shares issued, net of issuance costs

 

?

 

 

 

?

 

Purchase of treasury stock

 

?

 

 

 

?

 

Proceeds from issuance of SHHL redeemable C ordinary shares, net of issuance costs

 

?

 

 

 

?

 

Net cash (used in) provided by financing activities

 

(379

)

 

 

(631

)

Effect of exchange rate changes on cash and cash equivalents, and restricted cash

 

(569

)

 

 

1,002

 

Net (decrease) increase in cash and cash equivalents, and restricted cash

 

(19,051

)

 

 

(27,823

)

Cash, cash equivalents and restricted cash

 

 

 

 

 

Beginning of period

 

163,607

 

 

 

190,043

 

End of period

$

144,556

 

 

$

162,220

 

 

 

For the 13 Weeks Ended

 

(in thousands)

 

March 31, 2024

 

 

April 2, 2023

 

Cash, cash equivalents and restricted cash are comprised of:

 

 

 

 

 

 

Cash and cash equivalents

 

 

142,320

 

 

 

153,820

 

Restricted cash

 

 

2,236

 

 

 

8,400

 

Cash, cash equivalents and restricted cash as of March 31, 2024 and April 2, 2023

 

$

144,556

 

 

$

162,220

 

Supplemental disclosures:

 

 

 

 

 

 

Cash paid for interest, net of capitalized interest

 

$

10,235

 

 

$

8,573

 

Cash paid for income taxes

 

 

1,360

 

 

 

263

 

Supplemental disclosures of non-cash investing and financing activities:

 

 

 

 

 

 

Operating lease assets obtained in exchange for new operating lease liabilities

 

 

19,450

 

 

 

33,152

 

Acquisitions of property and equipment under finance leases

 

 

198

 

 

 

?

 

Accrued capital expenditures

 

 

7,764

 

 

 

15,354

 

Condensed Unaudited Consolidated Balance Sheet as of March 31, 2024 and December 31, 2023:

 

As of

 

(in thousands, except for par value and share data)

March 31, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

$

142,320

 

 

$

161,656

 

Restricted cash

 

2,236

 

 

 

1,951

 

Accounts receivable, net

 

58,926

 

 

 

58,158

 

Inventories

 

62,137

 

 

 

60,768

 

Prepaid expenses and other current assets

 

138,247

 

 

 

112,512

 

Total current assets

 

403,866

 

 

 

395,045

 

Property and equipment, net

 

617,465

 

 

 

627,035

 

Operating lease assets

 

1,147,753

 

 

 

1,150,165

 

Goodwill

 

204,150

 

 

 

206,285

 

Other intangible assets, net

 

125,363

 

 

 

127,240

 

Equity method investments

 

21,775

 

 

 

21,695

 

Deferred tax assets

 

733

 

 

 

740

 

Other non-current assets

 

2,518

 

 

 

9,597

 

Total non-current assets

 

2,119,757

 

 

 

2,142,757

 

Total assets

$

2,523,623

 

 

$

2,537,802

 

Liabilities and Shareholders' Deficit

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

$

86,482

 

 

$

70,316

 

Accrued liabilities

 

87,941

 

 

 

84,815

 

Current portion of deferred revenue

 

114,415

 

 

 

117,129

 

Indirect and employee taxes payable

 

30,349

 

 

 

38,169

 

Current portion of debt, net of debt issuance costs

 

34,184

 

 

 

29,290

 

Current portion of operating lease liabilities - sites trading less than one year

 

947

 

 

 

1,721

 

Current portion of operating lease liabilities - sites trading more than one year

 

50,057

 

 

 

49,436

 

Other current liabilities

 

42,439

 

 

 

33,633

 

Total current liabilities

 

446,814

 

 

 

424,509

 

Debt, net of current portion and debt issuance costs

 

637,519

 

 

 

635,576

 

Property mortgage loans, net of debt issuance costs

 

137,170

 

 

 

137,099

 

Operating lease liabilities, net of current portion - sites trading less than one year

 

65,279

 

 

 

68,762

 

Operating lease liabilities, net of current portion - sites trading more than one year

 

1,235,405

 

 

 

1,234,140

 

Finance lease liabilities

 

77,920

 

 

 

78,481

 

Financing obligation

 

76,717

 

 

 

76,624

 

Deferred revenue, net of current portion

 

25,195

 

 

 

25,787

 

Deferred tax liabilities

 

1,776

 

 

 

1,510

 

Other non-current liabilities

 

5,222

 

 

 

5,941

 

Total non-current liabilities

 

2,262,203

 

 

 

2,263,920

 

Total liabilities

 

2,709,017

 

 

 

2,688,429

 

Commitments and contingencies

 

 

 

 

 

 

As of

 

(in thousands, except for par value and share data)

March 31, 2024

 

 

December 31, 2023

 

Shareholders' deficit

 

 

 

 

 

Class A common stock, $0.01 par value, 1,000,000,000 shares authorized, 65,272,905 shares issued and 54,805,785 outstanding as of March 31, 2024 and 64,208,851 shares issued and 53,741,731 outstanding as of December 31, 2023; Class B common stock, $0.01 par value, 500,000,000 shares authorized, 141,500,385 shares issued and outstanding as of March 31, 2024 and December 31, 2023.

 

2,068

 

 

 

2,057

 

Additional paid-in capital

 

1,239,266

 

 

 

1,231,941

 

Accumulated deficit

 

(1,406,405

)

 

 

(1,360,365

)

Accumulated other comprehensive income

 

34,088

 

 

 

30,000

 

Treasury stock, at cost; 10,467,120 shares as of March 31, 2024 and December 31, 2023.

 

(62,000

)

 

 

(62,000

)

Total shareholders' deficit attributable to Soho House & Co Inc.

 

(192,983

)

 

 

(158,367

)

Noncontrolling interest

 

7,589

 

 

 

7,740

 

Total shareholders' deficit

 

(185,394

)

 

 

(150,627

)

Total liabilities and shareholders' deficit

$

2,523,623

 

 

$

2,537,802

 

Key Performance and Operating Metrics Evaluated by Management

In assessing the performance of our business, we consider a variety of operating and financial measures. These key measures include:

HOUSE MEMBERSHIP REVENUES. House Membership Revenues are comprised primarily of annual membership fees and one-time legacy registration fees from Soho House members which are amortized over 20 years. The one-time registration fee is no longer applicable to new members admitted from April 4, 2022, see House Introduction Credits below.

HOUSE INTRODUCTION CREDITS. New members admitted from April 4, 2022 have been required to purchase House Introduction Credits as part of their membership, per the House rules. House Introduction Credits are credits of an equivalent value to cash within Houses and are redeemable to purchase food and beverage items, and bedroom stays, at the Houses. House Introduction Credits expire after the first three months from the date of issuance, where legally permitted in the regions we operate, if not utilized or if the Company terminates a member's House membership. House Introduction Credits are recognized upon issuance as deferred revenue on our consolidated balance sheets. Revenue from House Introduction Credits are recognized as In-House revenues when redeemed by members, and as breakage revenue within Membership revenues upon expiration or in the period that we are able to reliably estimate expected breakage to the extent that they are unredeemed, are recognized.

IN-HOUSE REVENUES. In-House revenues include all revenues realized within our Houses, including food and beverage, accommodation and spa products and treatments.

HOUSE REVENUES. House Revenues is defined as Membership revenues plus In-House revenues less Non-House Membership Revenues. Our management views House Membership Revenues and In-House revenues as interrelated and their aggregation as important in tracking House performance. Although there is no minimum spend for any member on In-House offerings, nevertheless in practice most members consume food and beverage, accommodations and other offerings at our Houses. The pricing of our In-House offerings is reflective of the fact that the significant majority of In-House offerings that generate In-House revenues are consumed by members who also pay a membership fee in relation to that House, with pricing of such In-House offerings being identical for both members and non-members.

NUMBER OF SOHO HOUSES. The number of Soho Houses reflects the total number of Soho Houses in operation in any period, irrespective of whether each House is (i) controlled by us, (ii) operated through a non-controlling interest in a joint venture or (iii) operated through a management contract.

We review the number of members from all Houses to assess new member growth, total House Revenues, and House-Level Contribution.

TOTAL MEMBERS. Total members is defined as Soho House members plus Other members.

NUMBER OF SOHO HOUSE MEMBERS. Our Soho House membership model is an integral part of our business and has a significant impact on our profitability and financial performance. Typically, members hold an Every House membership or a Local House membership. Member count is the primary driver of Membership Revenues and is also a critical factor in In-House Revenues as members utilize the offerings that are provided within the Houses. Soho House members include all active, frozen and non-paying members.

The extent to which we achieve growth in our membership base, retain existing members and periodically increase our membership fee rates will impact our profitability. We have historically enjoyed strong member loyalty, reflected by very high retention rates. Robust demand for our memberships is also evidenced by considerable wait lists for our Houses.

The year-over-year increase in our total number of Soho House members is driven by a combination of increases in membership at existing Houses and members from new Houses.

NUMBER OF OTHER MEMBERS. Other members include members of Soho Works and Soho Friends and are key to our growth strategy and enhancing our Soho House member experience. Prior to August 2022, HOME+ membership, which is now included in Soho Friends, was also included. Like Soho House members, other memberships are an integral part of our business and we believe will have a significant impact on our profitability and financial performance in the future.

SOHO HOUSE MEMBER RETENTION. Soho House Member Retention is defined as the number of Adult Paying Members (being all Soho House members excluding child members and complimentary members) at the beginning of a period less the number of Adult Paying Members who canceled their membership during that same period (without giving any effect to Adult Paying Members who froze their memberships during such period), as a proportion of total Adult Paying Members at the beginning of such period.

FROZEN MEMBERS. Frozen Members refers to Soho House members who have elected to suspend their membership payments on a six, nine- or twelve-month basis during which period the member is not able to gain access to a Soho House site as a member, access our membership Apps, or book bedrooms or Cowshed treatments or products on discounted member rates. Frozen Members are not included in Adult Paying Members, but are included in the total number of Soho House members.

MEMBERSHIP REVENUES. Membership revenues are comprised of House Membership Revenues (as defined below) and Non-House Membership Revenues (as defined below). House Membership Revenues and Non-House Membership Revenues are each comprised primarily of annual membership fees and one-time registration fees which are amortized over 20 years. Membership revenues are a function of the number of members, membership mix, and membership pricing. For GAAP, we report Membership revenues only from Houses and sites in which we own a controlling interest. Our membership pricing varies by geographic segment and membership offering and, as such, our mix of House and Soho Works club openings can affect our revenue growth and profitability over time. Prices are generally higher in North America and the rest of the world compared with the UK and Europe. Membership revenues provide a stable and recurring source of revenues which have few direct costs and, as such, is a reliable and predictable source of cash flow.

HOUSE MEMBERSHIP REVENUES. House Membership Revenues is an important performance indicator and is defined above in the Non-GAAP reconciliation.

IN-HOUSE REVENUES. In-House revenues refer to all revenues realized within our Houses, and primarily includes revenues from food and beverage, accommodation, and spa products and treatments.

HOUSE REVENUES. House Revenues is an important performance indicator and is defined in "Non-GAAP Financial Measures."

OTHER REVENUES. Other revenues are defined as total revenues that are not realized within our Houses, including revenues from Scorpios, Soho Works and our stand-alone restaurants, procurement fees from Soho House Design, Soho Home and Cowshed retail products and other revenues from products and services that we provide outside of our Houses, as well as management fees from The Ned sites and The LINE and Saguaro hotels.

NON-HOUSE MEMBERSHIP REVENUES. Non-House Membership Revenues are comprised of Soho Works membership revenue, Soho Friends membership revenue and SOHO HOME+ membership revenue which was merged into Soho Friends membership at the beginning of August 2022.

ACTIVE APP USERS. Active App Users is defined as unique users who have logged into any of our membership Apps within the last three months.

AVERAGE DAILY RATE. is Average Daily Rate represents the average rental income per paid occupied room.

REVENUE PER AVAILABLE ROOM (RevPAR). The key industry standard for measuring hotel-operating performance is RevPAR, which is calculated by multiplying the percentage of occupied rooms to available rooms by the average daily rate realized. Where this is presented on a like-for like basis, RevPAR is adjusted for new or divested sites, for example Houses that were not open in the comparison period.

Forward Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our expected financial performance and operational performance for the remainder of fiscal 2024, as well as statements that include the words "expect," "intend," "plan," "believe," "project," "forecast," "estimate," "may," "should," "anticipate" and similar statements of a future or forward-looking nature. These forward-looking statements are based on management's current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including important factors discussed under the caption "Risk Factors" in our annual report on form 10-K for the fiscal year ended December 31, 2023 and as such factors may be updated from time to time in our other filings with the SEC, which are accessible on the SEC's website at www.sec.gov. In addition, we operate in rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. In addition, the forward-looking statements made in this release relate only to events or information as of the date on which the statements are made in this release. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

About Soho House & Co:

Soho House & Co (SHCO) 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. We began with the opening of the first Soho House in 1995 and remain the only company to have scaled a private membership network with a global presence. Members around the world engage with Soho House & Co through our global collection, as at March 31, 2024 of 43 Soho Houses, 9 Soho Works, Scorpios Beach Club in Mykonos, Soho Home ? our interiors and lifestyle retail brand ? and our digital channels. The Ned in London, New York and Doha, The LINE and Saguaro hotels in North America also form part of Soho House & Co's wider portfolio.

For more information, please visit www.sohohouseco.com.

Source: Soho House & Co (SHCO)


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