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 third quarter ended October 1, 2023.
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the full release here:
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Soho House Mexico City, the first Soho
House location in Latin America, opened in September 2023. (Photo:
Business Wire)
Third Quarter 2023
Highlights
- Total Members in the third quarter 2023 grew to 255,252 from
248,071 in second quarter 2023 and by 20.8% year-over-year
- Soho House Members grew to 184,542 from 176,305 in second
quarter 2023, and 21.3% year-over-year
- SHCO Membership waitlist now sits at approximately 98,000, an
all-time high, and retention rates continue around pre-pandemic
levels
- Total revenues of $301.0 million, 13.1% year-over-year
growth
- Membership revenues of $93.3 million increased by 31.3%
year-over-year, accounting for 31.0% of Total revenues
- In-House revenues grew to $115.3 million up 6.3% year-over-year
- Revenue Per Available Room (“RevPAR”) grew 6% year-over-year on
a like-for-like basis
- Net loss attributable to Soho House & Co Inc. was $42.4
million or $0.22 per share
- Adjusted EBITDA was $42.1 million, up $21.8 million from third
quarter 2022
- Opened Soho House Mexico City in September 2023
- Plan to open Portland and Sao Paulo around the end of the
year
- Effective November 1, 2023, Tom Collins, former Managing
Director - UK Europe & Asia, was appointed as Chief Operating
Officer of the Company
“This has been another quarter of strong execution against our
strategic objectives. Adjusted EBITDA more than doubled
year-on-year, supported by 14% margins. Total revenues increased by
13% year-on-year, with continued strong growth in recurring
membership revenues. We welcomed 8,000 net new members in the
quarter, inclusive of the very successful opening of Soho House
Mexico City,” said Andrew Carnie, CEO of Soho House & Co.
“Our third quarter results and fourth quarter performance to
date lead us to again increase our full year Adjusted EBITDA and
total members guidance. We are also setting year-end 2024
membership guidance to exceed 210,000 Soho House members. I would
like to thank our teams globally for their commitment as we
continue to grow and enhance the experience for our members, whilst
operating efficiently to drive greater profitability.”
Summary of
Financial Results for the Quarter Ended October 1,
2023
For the 13 Weeks Ended
(in thousands, except shares and per
share amount unless otherwise noted)
October 1, 2023
October 2, 2022
Total revenues
$
300,957
$
266,046
Membership revenues
93,279
71,023
In-House revenues
115,288
108,488
Other revenues
92,390
86,535
Operating income (loss)
(20,403
)
(70,581
)
House-Level Contribution(1)
52,773
32,599
House-Level Contribution margin (%)(1)
26
%
19
%
Other Contribution(1)
27,995
19,753
Other contribution margin (%)(1)
28
%
21
%
Net income (loss) attributable to SHCO
(42,362
)
(91,668
)
Adjusted EBITDA(1)
42,051
20,260
Adjusted EBITDA margin (%)(1)
14
%
8
%
Weighted average Class A and Class B
Shares outstanding (basic)
196,153,371
199,390,524
Basic and diluted income (loss) per
share
$
(0.22
)
$
(0.46
)
(1)
See “Non-GAAP Financial Measures” for
reconciliations of Non-GAAP measures to GAAP measures.
The following selected expenses listed below are not added back
in Adjusted EBITDA:
For the 13 Weeks Ended
(in thousands)
October 1, 2023
October 2, 2022
Pre-opening expenses
5,093
$
2,555
Non-cash rent
1,317
4,654
Deferred registration fees, net
(465
)
(489
)
We delivered the following highlights
against our strategic priorities in the third
quarter
1. Grow and Enhance Membership
- Membership continues to reach new highs benefiting from a
record waitlist and continued high retention rates
- Soho House members grew to 184,542 from 176,305 in second
quarter 2023, and 21.3% YoY
- Focused rollout of new initiatives has improved member
experience leading to elevated performance across Houses
- Opened Mexico City in September 2023, expect to open Portland
and Sao Paulo around the end of the year
2. Operational Excellence to Drive Profitability
- We achieved third quarter 2023 Adjusted EBITDA of $42.1
million, an increase of $21.8 million compared to third quarter
2022
- In-House revenues grew to $115.3 million in third quarter 2023,
up from $108.5 million in third quarter 2022
- Like-for-like F&B margins at our Houses rose 230bps vs.
third quarter 2019
- Focus on driving accommodations performance resulted in 6%
RevPAR growth in third quarter 2023 vs. third quarter 2022 on a
like-for-like basis
Membership
Summary for the Quarter Ended October 1, 2023
As of
October 1, 2023
October 2, 2022
Total Members
255,252
211,351
Soho House
184,542
152,165
Frozen Members
5,417
2,187
Soho Friends
64,614
52,698
Soho Works
6,096
6,488
SH APP Active Users
187,759
156,769
As of
October 1, 2023
October 2, 2022
(Unaudited)
Number of Soho Houses
42
38
North America
15
13
United Kingdom
13
13
Europe/RoW
14
12
Number of Soho House Members
184,542
152,165
North America
67,664
57,221
United Kingdom
67,931
58,106
Europe/RoW
39,850
30,374
All Other
9,097
6,464
Number of Other Members
70,710
59,186
North America
19,239
16,200
United Kingdom
42,402
35,969
Europe/RoW
9,069
7,017
Number of Total Members
255,252
211,351
Number of Active App Users
187,759
156,769
Memberships
- Total Members grew to 255,252 from 248,071 in second
quarter 2023 and by 20.8% year-over-year
- Total Soho House Members grew to 184,542 from 176,305 in
second quarter 2023, as retention rates remain around pre-pandemic
levels, alongside membership intakes in both new and existing
Houses
- Frozen Members was 5,417 at the end of third quarter
2023. Frozen members as a % of total membership is still below
pre-pandemic levels
- Other Memberships including Soho Friends and Soho Works
increased to 70,710 members, a decrease of 1,056 from the end of
second quarter 2023 and a 19.5% increase year-over-year
Financing
- Soho House & Co Inc. ended third quarter 2023 with Cash and
cash equivalents and Restricted cash of $163 million
- In September, the Company repurchased 2 million of its Class A
Common Stock for $12 million
Updated Fiscal 2023 Guidance
The following forward-looking statements reflect our current
expectations as of today, November 10, 2023:
Fiscal 2022 Results
Actuals
Fiscal 2023 Old
Guidance
Fiscal 2023 New
Guidance
Total Soho House Members
161,975
>191,000
>192,000
Membership revenues
$273m
$360m - $367m
$361m – $366m
Total revenues*
$972m
$1.12b - $1.19b
$1.13b – $1.16b
Adjusted EBITDA**
$61m
$126m - $134m
$130m – $135m
*Assumes ~$20m YoY headwind from FX,
reflecting EUR/USD at 1.07 and GBP/USD at 1.22 for fiscal 2023
**Without adding back pre-opening costs,
non-cash rent and deferred registration fees of ~$25-30m combined
for fiscal 2023 as a whole
Looking further ahead, we also expect to exceed 210,000
members by the end of fiscal 2024.
Conference Call and Webcast: A conference call and live
webcast will be hosted to discuss these results on Friday, November
10, 2023, at 9am EST / 2pm GMT.
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 7256454 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 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 and Share-based compensation expense.
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, or general and
administrative expenses. 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, or general and administrative expenses. 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.
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 loss to
Adjusted EBITDA for the 13 weeks ending October 1, 2023 and October
2, 2022 is set forth below:
For the 13 Weeks Ended
Percent Change
October 1, 2023
October 2, 2022
Actuals
Constant Currency(1)
Actuals
(Unaudited, dollar amounts in
thousands, except share and per share amounts or unless otherwise
noted)
Net income (loss)
$
(41,450
)
$
(91,373
)
55
%
58
%
Depreciation and amortization
24,516
26,971
(9
)%
(15
)%
Interest expense, net
18,799
18,453
2
%
(5
)%
Income tax expense
4,208
3,013
40
%
30
%
EBITDA
6,073
(42,936
)
n/m
n/m
Loss on sale of property and other,
net
(7
)
12
n/m
n/m
Share of income of equity method
investments
(1,953
)
(686
)
n/m
n/m
Foreign exchange (gain) loss, net⁽²⁾
30,698
53,910
(43
)%
(47
)%
Share of equity method investments
adjusted EBITDA
2,557
1,978
29
%
20
%
Share-based compensation expense(3)
4,683
3,980
18
%
10
%
Operational reorganization and severance
expense(4)
—
4,046
—
—
Membership credits rebate(5)
—
(44
)
n/m
n/m
Adjusted EBITDA
$
42,051
$
20,260
n/m
93
%
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.
This excludes a $4 million non-cash
expense, which is included within Share-based compensation expense
in the Condensed Consolidated Statements of Operations, separately
presented within Operational reorganization and severance expense
below.
4.
Represents expenses incurred with respect
to an internal reorganization program of the Company's operations
team. In the 13 weeks ended October 2, 2022 this includes a
non-cash share-based compensation expense of $4 million and cash
severance related to the departure of the former Chief Operating
Officer of the Company. The non-cash share-based compensation
expense is reported within Share-based compensation expense in the
unaudited condensed consolidated statement of operations for the 13
weeks ended October 2, 2022.
5.
Beginning on March 14, 2020, due to the
COVID-19 pandemic, we issued membership credits to active members
of our closed Houses to be redeemed for certain Soho Home products
and services. Membership credits were a one-time goodwill gesture,
issued as a marketing offer to active members. The expense
represents our best estimate of the cost in fulfilling the
membership credits.
A Reconciliation of Operating loss to
House-Level Contribution & Other Contribution for the 13 weeks
ending October 1, 2023 and October 2, 2022 is set forth
below:
For the 13 Weeks Ended
October 1, 2023
October 2, 2022
Change %
October 2, 2022 Constant
Currency
Constant Currency Change
%
Actuals
(Unaudited, dollar amounts in
thousands)
Operating profit (loss)
$
(20,403
)
$
(70,581
)
71
%
$
(82,788
)
75
%
General and administrative
35,564
30,807
15
%
$
33,047
8
%
Pre-opening expenses
5,093
2,555
99
%
$
2,741
86
%
Depreciation and amortization
24,516
26,971
(9
)%
$
28,932
(15
)%
Share-based compensation
4,683
7,778
(40
)%
$
8,343
(44
)%
Foreign exchange (gain) loss, net
30,698
53,910
(43
)%
$
57,829
(47
)%
Other
617
912
(32
)%
$
978
(37
)%
Non-House membership revenues
(9,314
)
(7,700
)
(21
)%
$
(8,260
)
(13
)%
Other revenues
(92,390
)
(86,535
)
(7
)%
$
(91,686
)
(1
)%
Other operating expenses
73,709
74,482
(1
)%
79,897
(8
)%
House-Level Contribution
$
52,773
$
32,599
62
%
$
29,033
82
%
Operating profit (loss) margin
(7
)%
(27
)%
(27
)%
House-Level contribution margin
26
%
19
%
19
%
For the 13 Weeks Ended
October 1, 2023
October 2, 2022
Change %
October 2, 2022 Constant
Currency
Constant Currency Change
%
Actuals
(Unaudited, dollar amounts in
thousands)
Operating profit (loss)
$
(20,403
)
$
(70,581
)
71
%
$
(82,788
)
75
%
General and administrative
35,564
30,807
15
%
33,047
8
%
Pre-opening expenses
5,093
2,555
99
%
2,741
86
%
Depreciation and amortization
24,516
26,971
(9
)%
28,932
(15
)%
Share-based compensation
4,683
7,778
(40
)%
8,343
(44
)%
Foreign exchange (gain) loss, net
30,698
53,910
(43
)%
57,829
(47
)%
Other
617
912
(32
)%
978
(37
)%
House membership revenues
(83,965
)
(63,323
)
(33
)%
(65,347
)
(28
)%
In-House revenues
(115,288
)
(108,488
)
(6
)%
(113,018
)
(2
)%
In-House operating expenses
146,480
139,212
5
%
149,332
(2
)%
Total Other Contribution
$
27,995
$
19,753
42
%
$
20,049
40
%
Operating profit (loss) margin
(7
)%
(27
)%
(27
)%
Other Contribution Margin
28
%
21
%
21
%
Condensed Unaudited Consolidated
Statements of Operations for the 13 weeks ended October 1, 2023 and
October 2, 2022:
For the 13 Weeks Ended
(in thousands, except for per share
data)
October 1, 2023
October 2, 2022
Revenues
Membership revenues
$
93,279
$
71,023
In-House revenues
115,288
108,488
Other revenues
92,390
86,535
Total revenues
300,957
266,046
Operating expenses
In-House operating expenses
(146,480
)
(139,212
)
Other operating expenses
(73,709
)
(74,482
)
General and administrative expenses
(35,564
)
(30,807
)
Pre-opening expenses
(5,093
)
(2,555
)
Depreciation and amortization
(24,516
)
(26,971
)
Share-based compensation
(4,683
)
(7,778
)
Foreign exchange gain (loss), net
(30,698
)
(53,910
)
Other, net
(617
)
(912
)
Total operating expenses
(321,360
)
(336,627
)
Operating income (loss)
(20,403
)
(70,581
)
Other (expense) income
Interest expense, net
(18,799
)
(18,453
)
Gain (loss) on sale of property and other,
net
7
(12
)
Share of income of equity method
investments
1,953
686
Total other expense, net
(16,839
)
(17,779
)
Income (loss) before income
taxes
(37,242
)
(88,360
)
Income tax expense
(4,208
)
(3,013
)
Net income (loss)
(41,450
)
(91,373
)
Net income (loss) attributable to
noncontrolling interests
(912
)
(295
)
Net income (loss) attributable to Soho
House & Co Inc.
$
(42,362
)
$
(91,668
)
Net income (loss) per share attributable
to Class A and Class B common stock
Basic and diluted
$
(0.22
)
$
(0.46
)
Weighted average shares outstanding
Basic and diluted
196,153
199,391
Condensed Unaudited Consolidated
Statements of Cash flows for the 39 weeks ended October 1, 2023 and
October 2, 2022:
For the 39 Weeks Ended
(in thousands)
October 1, 2023
October 2, 2022
Cash flows from operating
activities
Net income (loss)
$
(59,753
)
$
(235,554
)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization
$
74,229
$
72,490
Non-cash share-based compensation
15,154
18,865
Deferred tax benefit
(778
)
(299
)
Gain on sale of property and other,
net
(596
)
(1,529
)
Share of (income) loss of equity method
investments
(4,411
)
(2,426
)
Amortization of debt issuance costs
2,110
3,471
Loss on debt extinguishment
3,278
—
PIK interest (settled), net of non-cash
interest
27,908
25,663
Distributions from equity method
investees
162
596
Foreign exchange (gain) loss, net
(3,899
)
128,160
Changes in assets and liabilities:
0
0
Accounts receivable
(22,110
)
(14,986
)
Inventories
2,465
(12,509
)
Operating leases, net
5,558
30,283
Other operating assets
(25,212
)
(31,670
)
Deferred revenue
7,467
26,341
Accounts payable and accrued and other
liabilities
8,904
31,210
Net cash provided by operating
activities
30,476
38,106
Cash flows from investing
activities
Purchase of property and equipment
(50,440
)
(62,989
)
Proceeds from sale of assets
1,368
665
Purchase of intangible assets
(13,989
)
(17,628
)
Property and casualty insurance proceeds
received
148
338
Net cash used in investing activities
(62,913
)
(79,614
)
Cash flows from financing
activities
Repayment of borrowings
(117,350
)
(533
)
Payment for debt extinguishment costs
(1,686
)
—
Issuance of related party loans
—
3,217
Proceeds from borrowings
140,000
105,795
Payments for debt issuance costs
(2,822
)
(1,860
)
Principal payments on finance leases
(221
)
(431
)
Principal payments on financing
obligation
—
(1,175
)
Distributions to noncontrolling
interests
(390
)
(771
)
Purchase of treasury stock
(12,000
)
(34,802
)
Additional IPO costs
—
(269
)
Net cash provided by financing
activities
5,531
69,171
Effect of exchange rate changes on cash
and cash equivalents, and restricted cash
(97
)
(13,224
)
Net (decrease) increase in cash and cash
equivalents, and restricted cash
(27,003
)
14,439
Cash, cash equivalents and restricted
cash
Beginning of period
190,043
220,662
End of period
$
163,040
$
235,101
For the 39 Weeks Ended
(in thousands)
October 1, 2023
October 2, 2022
Cash, cash equivalents and restricted cash
are comprised of:
Cash and cash equivalents
162,540
227,896
Restricted cash
500
7,205
Cash, cash equivalents and restricted
cash as of October 1, 2023 and October 2, 2022
$
163,040
$
235,101
Supplemental disclosures:
Cash paid for interest
$
24,004
$
22,504
Cash paid for income taxes
3,027
138
Supplemental disclosures of non-cash
investing and financing activities:
Operating lease assets obtained in
exchange for new operating lease liabilities
79,631
101,640
Acquisitions of property and equipment
under finance leases
33
11,357
Accrued capital expenditures
11,736
7,908
Condensed Unaudited Consolidated
Balance Sheet as of October 1, 2023 and January 1, 2023:
As of
(in thousands, except for par value and
share data)
October 1, 2023
January 1, 2023
Assets
Current assets
Cash and cash equivalents
$
162,540
$
182,115
Restricted cash
500
7,928
Accounts receivable, net
64,589
42,215
Inventories
55,768
57,848
Prepaid expenses and other current
assets
116,998
91,101
Total current assets
400,395
381,207
Property and equipment, net
637,133
647,001
Operating lease assets
1,131,435
1,085,579
Goodwill
199,693
199,646
Other intangible assets, net
124,356
125,968
Equity method investments
25,592
21,629
Deferred tax assets
469
295
Other non-current assets
8,296
6,571
Total non-current assets
2,126,974
2,086,689
Total assets
$
2,527,369
$
2,467,896
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable
$
75,598
$
80,741
Accrued liabilities
94,068
84,112
Current portion of deferred revenue
108,629
91,611
Indirect and employee taxes payable
37,614
38,088
Current portion of debt, net of debt
issuance costs
25,887
25,617
Current portion of operating lease
liabilities - sites trading less than one year
2,413
4,176
Current portion of operating lease
liabilities - sites trading more than one year
44,353
35,436
Other current liabilities
34,317
36,019
Total current liabilities
422,879
395,800
Debt, net of current portion and debt
issuance costs
607,609
579,904
Property mortgage loans, net of debt
issuance costs
136,991
116,187
Operating lease liabilities, net of
current portion - sites trading less than one year
93,117
227,158
Operating lease liabilities, net of
current portion - sites trading more than one year
1,161,968
982,306
Finance lease liabilities
77,040
76,638
Financing obligation
76,533
76,239
Deferred revenue, net of current
portion
25,772
27,118
Deferred tax liabilities
1,026
1,666
Other non-current liabilities
—
256
Total non-current liabilities
2,180,056
2,087,472
Total liabilities
2,602,935
2,483,272
Commitments and contingencies
As of
(in thousands, except for par value and
share data)
October 1, 2023
January 1, 2023
Shareholders’ equity
Class A common stock, $0.01 par value,
1,000,000,000 shares authorized, 63,704,578 shares issued and
53,237,458 outstanding as of October 1, 2023 and 62,189,717 issued
and 53,722,597 outstanding as of January 1, 2023; Class B common
stock, $0.01 par value, 500,000,000 shares authorized, 141,500,385
shares issued and outstanding as of October 1, 2023 and January 1,
2023
2,052
2,037
Additional paid-in capital
1,228,225
1,213,086
Accumulated deficit
(1,303,370
)
(1,242,412
)
Accumulated other comprehensive income
51,780
54,853
Treasury stock, at cost; 10,467,120 shares
as of October 1, 2023 and 8,467,120 shares as of January 1,
2023
(62,000
)
(50,000
)
Total shareholders’ deficit attributable
to Soho House & Co Inc.
(83,313
)
(22,436
)
Noncontrolling interest
7,747
7,060
Total shareholders’ deficit
(75,566
)
(15,376
)
Total liabilities and shareholders’
equity
$
2,527,369
$
2,467,896
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 House
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 2023 and 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 January 1, 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 October 1, 2023, of 42 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.
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Investor Relations ir@sohohouseco.com
Media and Press press@sohohouseco.com
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