Sonder Holdings Inc (SOND) 2023 Q3 法說會逐字稿

Good day and welcome to the Sonder's Third Quarter Earnings Call.

美好的一天，歡迎參加盛達澳第三季財報電話會議。

(Operator Instructions)

（操作員說明）

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Ellie Ducommun, Senior Director of Strategic Finance, and Investor Relations. Please go ahead.

請注意，今天的會議正在錄製中。現在我想將會議交給您的演講者、策略財務和投資者關係高級總監 Ellie Ducommun。請繼續。

Thank you, operator. Good afternoon, everyone. Welcome, and thank you for joining us to discuss Sonder's Third Quarter 2023 financial results. Joining me on the call is Francis Davidson, Co-Founder and Chief Executive Officer, and Dom Bourgault, Chief Financial Officer.

謝謝你，接線生。大家下午好。歡迎並感謝您加入我們討論盛達澳 2023 年第三季的財務表現。與我一起參加電話會議的是聯合創始人兼首席執行官弗朗西斯·戴維森 (Francis Davidson) 和首席財務官多姆·布爾格 (Dom Bourgault)。

Our third-quarter shareholder letter and Form 10-Q were issued today after the close of the market. These materials are available in the Investor Relations section of our website at investors.sonder.com.

我們的第三季股東信函和 10-Q 表格於今天收盤後發布。這些資料可在我們網站的投資者關係部分取得：investors.sonder.com。

We encourage you to reference the detailed information contained in those materials during our call. Before we begin, I would like to remind everyone that our prepared remarks and the Q&A session to follow contain forward-looking statements under Federal Securities Laws. These statements are subject to numerous risks and uncertainties as described in our SEC filings, which could cause future results to differ materially from those expressed in or implied by our remarks, comments, or material, including our shareholder letter.

我們鼓勵您在我們的通話中參考這些資料中包含的詳細資訊。在開始之前，我想提醒大家，我們準備的發言和隨後的問答環節包含聯邦證券法規定的前瞻性陳述。這些聲明受到我們向美國證券交易委員會提交的文件中所述的眾多風險和不確定性的影響，這可能導致未來的結果與我們的言論、評論或材料（包括我們的股東信函）中表達或暗示的結果存在重大差異。

Statements in our remarks comments and materials are effective today only and will not be updated as actual events unfold. You can find reconciliations of all non-GAAP financial measures referred to in our remarks within our shareholder letter in the Investor Relations section of our website.

我們的言論評論和資料中的聲明僅在今天有效，並且不會隨著實際事件的發生而更新。您可以在我們網站投資者關係部分的股東信中找到我們評論中提到的所有非公認會計準則財務指標的調節表。

With that, I will turn the call over to Francis.

這樣，我會將電話轉給法蘭西斯。

Thanks, Ellie. Good afternoon, everyone, and thank you for joining us today. I would like to start by thanking all of our Sonder employees, our guests, and our partners for their support as we strive to fulfill our mission to revolutionize hospitality through design and technology, making world of better stays open to all.

謝謝，艾莉。大家下午好，感謝您今天加入我們。首先，我要感謝所有盛達澳員工、客人和合作夥伴在我們努力履行透過設計和技術革新酒店業的使命、讓所有人享受更美好住宿的世界時所給予的支持。

To provide a few highlights from the third quarter, revenue grew 29% year-over-year, driven by a 33% increase in bookable nights on a 31% increase in overall live units. With a 2% decline in ADR to $185, coupled with a 1% decline in occupancy rates to 83%. We also produced all of this growth with a 14% improvement in total overhead costs and a 9% improvement in total property level expenses per occupied nights. These accomplishments resulted in a 60% improvement in our free cash flow compared to last year from negative $39 million to negative $16 million and a 21% improvement in free cash flow margin from negative 31% to negative 10%.

第三季的一些亮點是，營收年增 29%，這主要得益於可預訂間夜數成長 33%，整體住宿單位成長 31%。 ADR 下降 2% 至 185 美元，入住率下降 1% 至 83%。我們也實現了所有這些成長，總管理費用降低了 14%，每入住晚數的總物業水準費用降低了 9%。這些成就使我們的自由現金流比去年提高了 60%，從負 3,900 萬美元提高到負 1,600 萬美元，自由現金流利潤率提高了 21%，從負 31% 提高到負 10%。

I'm incredibly proud of the progress we're making toward our goal of sustainable positive free cash flow. We're pulling every lever at our disposal to rapidly deliver on this objective, Dom will share more details about our results with you in a few minutes. But first, I'd like to dive a bit deeper into our revenue and supply growth as well as the portfolio optimization program we're undertaking to improve our current portfolio economics.

我對我們在實現可持續正自由現金流目標方面所取得的進展感到無比自豪。我們正在竭盡全力快速實現這一目標，Dom 將在幾分鐘內與您分享有關我們結果的更多詳細資訊。但首先，我想更深入地了解我們的收入和供應成長，以及我們為改善當前投資組合經濟效益而正在進行的投資組合優化計劃。

Across all of our center properties, RevPAR declined 3% year-over-year. Our comparable properties RevPAR, which is calculated in line with industry peers and looks at RevPARs for Sonder properties that were live prior to January 1, 2022, grew 3% year-over-year. Several factors came into play this quarter, including broader travel industry trends, product mix between hotel and apartment style properties, geographic mix, cohort mix, and the impact of our corporate sales and pricing strategies.

我們所有中心物業的 RevPAR 年減 3%。我們的可比較房產 RevPAR 是按照行業同行的標準計算的，並考慮了 2022 年 1 月 1 日之前投入使用的 Sonder 房產的 RevPAR，同比增長了 3%。本季度有幾個因素發揮作用，包括更廣泛的旅遊業趨勢、酒店和公寓式酒店之間的產品組合、地理組合、群體組合以及我們公司銷售和定價策略的影響。

Starting with the product mix, we continued to see relative strength in our hotel product and moderate pricing pressure for our apartment product. On a comparable properties basis, our hotel product grew RevPAR by 8% year-over-year, while our apartment product RevPAR grew by 1%. This bifurcation is representative of the market trends with hotel RevPAR growing year on year, but alternative accommodation, RevPAR decreasing across our geographies, particularly in North America.

從產品組合開始，我們繼續看到酒店產品的相對優勢和公寓產品的適度定價壓力。在可比較物業基礎上，我們的飯店產品每間可用房收入年增 8%，而公寓產品每間可用房收入成長 1%。這種分歧代表了市場趨勢，酒吧的 RevPAR 逐年增長，但替代住宿的 RevPAR 在我們的各個地區都在下降，特別是在北美。

Hotels now make up 40% of total live units compared to approximately 30% a year ago. While our hotel RevPAR growth outpaced that of our apartment product RevPAR for our hotel properties tends to be slightly lower than our apartment style properties. All else equal, the shift towards hotel properties had a roughly 1% negative impact on our year-over-year RevPAR growth. From a profitability perspective, hotel properties also tend to have lower rent and property level expenses to offset the lower RevPAR.

飯店目前佔居住單位總數的 40%，而一年前這一比例約為 30%。雖然我們的飯店RevPAR成長速度超過了公寓產品RevPAR，但我們飯店物業的RevPAR往往略低於我們的公寓式物業。在其他條件相同的情況下，向酒店物業的轉變對我們的 RevPAR 同比增長產生了約 1% 的負面影響。從盈利能力的角度來看，酒店物業的租金和物業水平費用也往往較低，以抵消較低的每間客房收入。

In terms of geographic performance, we're continuing to see strong demand for our properties in Europe and the Middle East growing comparable properties RevPAR 14% year-over-year in those markets, while our North American comparable properties RevPAR remained flat. This trend is consistent with broader industry trends. According to the US Travel Association, Americans traveling abroad in July exceeded pre-pandemic levels by 10%, while inbound travel still lags pre-pandemic levels by roughly 20%.

就地理表現而言，我們繼續看到歐洲和中東地區對我們的房產的強勁需求，這些市場的可比房產每間可用房收入同比增長14%，而我們的北美可比房產每間可用房收入保持平穩。這一趨勢與更廣泛的行業趨勢一致。美國旅遊協會的數據顯示，7月美國人的出境旅遊數量超出了疫情前的水平10%，而入境遊仍落後於疫情前的水平約20%。

Our RevPAR was also negatively impacted by some slower starts in a few of our recent North American property openings, properties that have been live for less than a year had average RevPAR approximately 30% lower than our mature units in Q3. It typically takes time for new properties to ramp up, but this is a larger drag than we've seen in the past, primarily due to a greater proportion of properties that rely heavily on B2B sales.

我們最近在北美開業的一些房產的啟動速度較慢，也對我們的每間可用房收入產生了負面影響，開業不到一年的房產的平均每間可用房收入比我們第三季度的成熟單位低約30%。新房產的增加通常需要時間，但這比我們過去看到的阻力更大，主要是因為更大比例的房產嚴重依賴 B2B 銷售。

We've been investing in local sales teams in markets where the assets require them, and we're seeing early signs of success from this initiative. Additionally, we're seeing challenges in properties in Mexico City, which make up over 10% of the cohort of units that went live in the last year. We're planning to partner with property owners there to address these challenges of our portfolio optimization program, which we'll discuss in more detail shortly.

我們一直在資產需求的市場上投資當地銷售團隊，我們看到了這項措施成功的早期跡象。此外，我們也看到墨西哥城的房產面臨挑戰，這些房產佔去年投入使用的公寓數量的 10% 以上。我們計劃與那裡的業主合作，解決我們的投資組合優化計劃的這些挑戰，我們將很快對此進行更詳細的討論。

Our B2B sales efforts are regaining momentum. Our new VP of Sales joined us in Q3, and we're seeing an acceleration in our forward bookings, but we expect the impact on earned revenue to ramp over the next few quarters as corporate sales tend to have longer booking windows. Success in our corporate sales segment should enable us to bolster RevPAR in are primarily urban markets and in particular during weekdays.

我們的 B2B 銷售工作正在恢復勢頭。我們的新銷售副總裁在第三季加入我們，我們看到提前預訂量增加，但我們預計，由於企業銷售的預訂窗口往往更長，因此對收入的影響將在未來幾季增加。我們企業銷售部門的成功應該使我們能夠提高主要城市市場的每間可用房屋收入，特別是在工作日。

And finally, this quarter, we leaned into a pricing strategy that focuses on building a better base of occupancy earlier in the booking window and enables us to have greater pricing power over the rest of the booking window. Overall, our experimentation and early results suggest this approach should yield higher ADR. We leaned into the strategy more aggressively in late July and expect to see more of its impact in the coming quarters.

最後，本季度，我們採取了一種定價策略，重點是在預訂窗口的早期建立更好的入住基礎，並使我們能夠在預訂窗口的其餘時間擁有更大的定價權。總的來說，我們的實驗和早期結果表明這種方法應該會產生更高的 ADR。我們在 7 月下旬更加積極地採用了該策略，並預計在未來幾季會看到其更多影響。

We also continue to make progress on other RevPAR initiatives we've previously highlighted, including our elevated visual merchandising platform and ancillary revenue initiatives.

我們也繼續在先前強調的其他 RevPAR 計畫上取得進展，包括我們提升的視覺行銷平台和輔助收入計畫。

Moving on to the supply side, we're pleased to report. Our live units grew 31% year-over-year, driven by continued strong conversion from our contracted units to live units. However, our total portfolio of live units plus contracted units did decline 10% year-over-year and 2% sequentially. Similar to last quarter as development cost uncertainty and persistent high interest rates remain a significant issue for developers and landlords, we felt it was prudent to exclude a number of contracted units with financing contingencies, which drove a year-over-year and sequential declines.

轉向供應方面，我們很高興地報告。由於我們的合約單位向實際單位的持續強勁轉化，我們的實際單位同比增長了 31%。然而，我們的現有單位和簽約單位的總投資組合確實比去年同期下降了 10%，環比下降了 2%。與上季類似，由於開發成本的不確定性和持續的高利率仍然是開發商和房東面臨的一個重大問題，我們認為謹慎的做法是排除一些有融資意外情況的合約單位，這些意外情況導致了年比和連續下降。

Even after excluding these units, we continue to have a notable backlog of contracted units, representing a strong growth pipeline of nearly 50% of our live unit count. This is in line with our strategy set out in June 2022 to proactively reduce our planned funding space and focus primarily on growth driven by the conversion of our contracted units.

即使排除這些單位後，我們仍然有大量合約單位積壓，占我們現有單位數量近 50% 的強勁成長管道。這符合我們在 2022 年 6 月制定的策略，即主動減少計畫融資空間，並主要關注合約單位轉換驅動的成長。

The strategy supports our goal to deliver sustainable positive free cash flow as soon as possible, given upfront costs to originate and sign our contracted deals have already been incurred. They're expected to be cash accretive as they come live due to their capital light structure and this narrowed focus enables us to prioritize improving the economics of our current portfolio.

鑑於發起和簽署合約交易的前期成本已經產生，該策略支持我們盡快提供可持續的正自由現金流的目標。由於其輕資本結構，預計它們上線後將帶來現金增值，而這種縮小的關注範圍使我們能夠優先考慮改善當前投資組合的經濟性。

As we strive to grow top line revenue we also continue to scrutinize future leasehold obligations, particularly on underperforming assets. While the majority of our properties are profitable and some of our properties do have negative margins. With that, we're collaborating with external advisors to implement a portfolio optimization program, working to understand how we can mitigate losses related to these underperforming properties, assessing our portfolio of rents relative to current operations and the existing market rents and exploring alternative solutions to minimize their drag on our bottom line.

在我們努力增加營收的同時，我們也繼續審查未來的租賃義務，特別是表現不佳的資產。雖然我們的大部分物業都是盈利的，但我們的部分物業確實有負利潤。為此，我們正在與外部顧問合作實施投資組合優化計劃，努力了解如何減輕與這些表現不佳的房產相關的損失，評估我們相對於當前營運和現有市場租金的租金組合，並探索替代解決方案盡量減少它們對我們底線的拖累。

We're engaging our landlords to work towards solutions at certain properties where both parties may benefit from revised commitments. We value the collaboration with our landlords as we'll seek mutually agreeable outcomes as part of the strategic initiative. It's never the intent for an operation to underperform, but in today's challenging marketplace, we must appreciate that a proactive approach to asset management is more important than ever.

我們正在與房東合作，為某些房產制定解決方案，雙方都可以從修訂後的承諾中受益。我們重視與業主的合作，因為我們將尋求雙方同意的結果作為策略性舉措的一部分。營運表現不佳絕不是我們的本意，但在當今充滿挑戰的市場中，我們必須認識到，積極主動的資產管理方法比以往任何時候都更重要。

Before turning it over to Dom, I want to highlight several new additions to the world-class team we're building at Sonder. First, I'm thrilled to welcome Tom Buoy and Simon Turner to our Board, Tom and Simon are among the most accomplished executives in the hospitality industry. They both bring deep expertise and experience in areas, including executive leadership operations, revenue generation and real estate.

在將其交給 Dom 之前，我想強調我們在 Sonder 建立的世界級團隊中的幾位新成員。首先，我很高興歡迎 Tom Buoy 和 Simon Turner 加入我們的董事會，Tom 和 Simon 是酒店業最有成就的主管之一。他們都在行政領導營運、創造收入和房地產等領域帶來了深厚的專業知識和經驗。

I'm also pleased to announce we've been recently joined by Adam Bowen as Chief Accounting Officer, Katie Potter as General Counsel, and Chad Fletcher as Vice President of Sales. Each of these individuals brings experience and knowledge that will be valuable assets as we continue executing on our plan to achieve sustainable positive free cash flow as soon as possible.

我還很高興地宣布，Adam Bowen 最近加入我們擔任首席會計官，Katie Potter 擔任總法律顧問，Chad Fletcher 擔任銷售副總裁。這些人中的每個人都帶來了經驗和知識，這些經驗和知識將成為我們繼續執行計劃以盡快實現可持續的正自由現金流的寶貴資產。

With that I'll turn the call over to our Chief Financial Officer, Dom Bourgault. Dom?

接下來，我會將電話轉給我們的財務長 Dom Bourgault。多姆？

Thank you, Francis. Hello, everyone, and thank you for your patience as we took a few more days to finalize or close process and release our results, we're pleased to report our best free cash flow quarter to date as a public company demonstrating continued progress on our path to achieving sustainable positive free cash flow in the near term and industry-leading unit economics over the long term.

謝謝你，法蘭西斯。大家好，感謝您的耐心等待，因為我們又花了幾天時間來完成或結束流程並發布我們的結果，我們很高興地報告我們作為上市公司迄今為止最好的自由現金流季度，展示了我們在短期內實現可持續的正自由現金流和長期行業領先的單位經濟效益的途徑。

I will first provide a brief overview of our third-quarter financial results and then take you through guidance before opening the call to questions. In the third quarter, free cash flow before onetime restructuring costs totaled negative $16 million compared to negative $27 million in the second quarter of this year and negative $39 million in the third quarter of 2022. Free cash flow margin also improved year-over-year, reaching negative 10% compared to negative 31% in the third quarter of 2022.

我將首先簡要概述我們第三季度的財務業績，然後在開始提問之前為您提供指導。第三季度，一次性重組成本前的自由現金流總額為負1,600 萬美元，而今年第二季為負2,700 萬美元，2022 年第三季為負3,900 萬美元。所改善，下降了 10%，而 2022 年第三季下降了 31%。

We generated $161 million of revenue, representing a 29% increase compared to Q3 of 2022. As Francis mentioned, key top line performance metrics improved year-over-year, including live units, bookable nights, and occupied nights while we experienced a slight decline in RevPAR. We ended the quarter with approximately 11,800 live units, representing 31% growth year-on-year, and we reached a milestone of over 1 million bookable nights in Q3 an increase of 33% year-over-year, driven by live unit growth. Occupancy remained strong at 83% in the third quarter, a slight decline from the 84% in Q3 of 2022, even as we saw significant growth in bookable nights.

我們創造了1.61 億美元的收入，與2022 年第三季相比增長了29%。夜數，而我們的收入略有下降每間可出租客房收入 (RevPAR)。截至本季末，我們擁有約11,800 套實時客房，年增31%，在第三季度，我們實現了可預訂間夜數超過100 萬間的里程碑，在實時客房數量增長的推動下，同比增長33 %。儘管我們看到可預訂夜數顯著增長，但第三季的入住率仍保持在 83% 的強勁水平，較 2022 年第三季的 84% 略有下降。

Since Francis went into details on our revenue performance, I will now focus my remarks on the cost side. For Q3 2023, total costs and operating expenses increased by 17% year-over-year to $218 million, which is inclusive of $5 million of stock-based compensation expense, the 17% increase in total costs on the back of a revenue increase of 29% and bookable nights growth of 33% illustrates the strong improvements we've been driving in our operating leverage.

既然弗朗西斯詳細介紹了我們的收入表現，我現在將重點討論成本方面。 2023 年第三季度，總成本和營運支出年增 17%，達到 2.18 億美元，其中包括 500 萬美元的股票薪酬支出，在收入增長的背景下，總成本增長了 17%。可預訂間夜數的成長33% 顯示我們在營運槓桿方面一直在大力改進。

Property-level costs grew by 19%, while our non-property level operating expenses were lower by 14% compared to the prior year. This operating leverage improvement in turn drove our trailing 12-month cash contribution margin to 19% in the most recent quarter compared to 17% in Q3 of 2022. We remain focused on driving leverage across all cost categories to support our goal of achieving sustainable positive free cash flow as soon as possible.

與前一年相比，物業層面的成本增加了 19%，而非物業層面的營運支出下降了 14%。營運槓桿率的改善反過來將我們最近一個季度的過去12 個月現金貢獻率提高至19%，而2022 年第三季為17%。實現可持續正成長的目標盡快實現自由現金流。

Francis, already spoke of our efforts to right-size our largest expense item, the cost of our leases were a large scale initiatives currently underway aiming to improve our individual property economics to meet the targeted profitability levels, they were underwritten with. We remain relentlessly focused on driving efficiencies across our property-level costs, where we've outperformed our cost targets for the first three quarters of 2023 due to the success of multiple direct cost reduction initiatives.

法蘭西斯先生已經談到了我們為調整最大開支項目規模所做的努力，我們的租賃成本是目前正在進行的一項大規模舉措，旨在改善我們的個人財產經濟，以滿足他們承保的目標盈利水平。我們仍然堅持不懈地致力於提高物業層面的成本效率，由於多項直接成本削減措施的成功，我們在 2023 年前三個季度的成本目標已經超出。

We're also continuing to identify non-property level cost savings as illustrated by the 14% decrease in this category compared to the prior year. As a reminder, we have reduced our corporate workforce over 30% on a net basis since going public in early 2022 and continue to press on to reduce our non-headcount expenses as well. Driving consistent improvements in our cost structure is now integrated in our normal operating rhythm across the enterprise.

我們也繼續尋找非財產層面的成本節約，這一類別與前一年相比下降了 14%。提醒一下，自 2022 年初上市以來，我們已將公司員工淨額減少了 30% 以上，並繼續努力減少非員工開支。推動成本結構的持續改善現已融入整個企業的正常營運節奏。

As discussed in our Q2 call in August, we evaluated the introduction of more common non-GAAP profitability metrics to make it easier to compare with our peers. As such, we plan to start using adjusted EBITDA and adjusted EBITDAR are in place of cash contribution margin beginning with our Q1 of 2024, earnings release.

正如我們在 8 月第二季電話會議中討論的那樣，我們評估了更常見的非 GAAP 獲利指標的引入，以便更容易與同行進行比較。因此，我們計劃從 2024 年第一季收益發布開始，開始使用調整後 EBITDA 和調整後 EBITDA 來取代現金邊際貢獻率。

Turning to the balance sheet, as of September 30, we had $207 million in cash, cash equivalents and restricted cash and $197 million in total debts. As you've seen in our 8-K last week, we've worked with our lenders to amend our credit agreements in the wake of the SVB Letters of Credit from earlier this year.

轉向資產負債表，截至 9 月 30 日，我們擁有 2.07 億美元的現金、現金等價物和限制性現金，以及 1.97 億美元的總債務。正如您上週在我們的 8-K 中所看到的，在今年早些時候的 SVB 信用證之後，我們與貸方合作修改了我們的信貸協議。

We're happy with the outcome, which allows us to regain some flexibility with the expansion of the banks we can use to issue letters of credit and the extension of the fixed feature on the term loan in exchange for a downpayment, reducing our gross debt level. We appreciate the partnership we have with our lenders.

我們對結果感到滿意，這使我們能夠透過擴大可用來簽發信用證的銀行以及延長定期貸款的固定功能以換取首付來重新獲得一定的靈活性，從而減少我們的總債務等級。我們感謝與貸方的合作關係。

Regarding guidance, known that the ranges we are providing for revenue and free cash flow for the fourth quarter of 2023 exclude any future impact of the portfolio optimization program that we discussed earlier on this call, which could be material. For the fourth quarter of 2023, we expect revenue between $165 million and $175 million, which at the midpoint represents a $148 million or 32% year-over-year improvement for full year 2023 and at $35 million or 26% improvement versus the fourth quarter of 2022.

關於指導，已知我們提供的 2023 年第四季度收入和自由現金流範圍不包括我們之前在本次電話會議上討論的投資組合優化計劃的任何未來影響，這可能是重大的。對於2023 年第四季度，我們預計營收在1.65 億美元至1.75 億美元之間，其中值表示2023 年全年營收將成長1.48 億美元，即年增32%，與第四季相比將成長3500萬美元，即成長26% 2022 年。

This implies a slight decline from the previous revenue range for the second half of the year provided on our last quarter call due to the factors that Francis alluded to earlier. For free cash flow, we expect to between negative $39 million and negative $29 million in the fourth quarter. At the midpoint of the guidance range provided this translates to a $58 million or 33% year-over-year improvement in free cash flow for the full year of 2023.

這意味著由於弗朗西斯之前提到的因素，我們在上一季電話會議上提供的下半年收入範圍略有下降。對於自由現金流，我們預計第四季的自由現金流將在負 3,900 萬美元到負 2,900 萬美元之間。如果按照指導範圍的中點計算，這意味著 2023 年全年自由現金流將增加 5,800 萬美元，即年增 33%。

This is in line with the bottom half of the implied Q4 range from our last quarter call, reflecting the lower revenue guidance in the additional $4.3 million in onetime prepayment interest penalties associated with our amended credit agreements, partially offset by continued progress on cost reduction initiatives.

這與我們上一季電話會議隱含的第四季度範圍的下半部分一致，反映出與我們修訂的信貸協議相關的額外430 萬美元一次性預付款利息罰款的收入指引較低，部分被成本削減舉措的持續進展所抵銷。

Note that while Q1 2023 free cash flow sequentially worsen compared to Q4 of 2022. We do not expect this pattern to repeat itself going into 2024. As we continue to run our corporate sales and collection processes and better spread payments of certain annual contracts throughout the year, we do expect a sequential improvement in free cash flow from Q4 of 2023 to Q1 of 2024.

請注意，雖然2023 年第一季的自由現金流與2022 年第四季相比連續惡化。並且更好地分攤某些年度合約的付款，今年，我們確實預計從 2023 年第四季到 2024 年第一季自由現金流將連續改善。

As a reminder, the same as past quarters, our guidance is based on our best knowledge available from internal data and third party forecasters and does not contemplate an extreme slowdown in net. Our guidance framework also does not incorporate any future impact of our portfolio optimization program, which may be material given that we are in the early stages and there are still many unknowns about the magnitude and timing of the revenue and free cash flow impacts.

提醒一下，與過去幾個季度一樣，我們的指導是基於我們從內部數據和第三方預測者獲得的最佳知識，並且沒有考慮淨值的極度放緩。我們的指導框架也沒有納入我們的投資組合優化計劃的任何未來影響，考慮到我們處於早期階段，並且對於收入和自由現金流影響的程度和時間仍然存在許多未知因素，這可能很重要。

While we are optimistic about the final outcome of this process there is a high degree of uncertainty around how this will affect revenue and free cash flow in the short term as we strive to bring our entire portfolio up to positive unit economics.

雖然我們對這個過程的最終結果感到樂觀，但隨著我們努力使整個投資組合達到正的單位經濟效益，這將如何影響短期內的收入和自由現金流，存在高度不確定性。

With that we're now happy to take your questions. Operator?

現在我們很樂意回答您的問題。操作員？

(Operator Instructions) Ron Josey, Citi.

（操作員指令）Ron Josey，花旗銀行。

Hey guys, this is Robert on for Ron. Thanks for taking my question. Quick question on gross margin came in a little bit lower than expected in the quarter. Can you just talk to kind of some of the main drivers behind that miss? And then perhaps comment on how you see margins trending over the next quarters?

大家好，我是羅恩的羅伯特。感謝您提出我的問題。關於本季毛利率的快速問題略低於預期。您能談談這次失誤背後的一些主要推動因素嗎？然後也許可以評論一下您如何看待未來幾季的利潤趨勢？

Hey, I'll take that question. This is Dom. In terms of the gross margins, I think this is mostly driven by the RevPAR, I mean just a little bit lower than where it was last year and up from what our expectations were as we saw the revenue results came in a bit towards the low end of the range.

嘿，我來回答這個問題。這是多姆。就毛利率而言，我認為這主要是由 RevPAR 推動的，我的意思是比去年略低一點，但高於我們的預期，因為我們看到收入結果有點接近低點範圍的末端。

In terms of the cost structure of the business we continue to see our EBITDA margin improving, our cost per unit coming down. So we're pleased with the success we've seen so far and the progress we've made on the cost side. But again, this remains in terms of GM percentage, subject to the volatility with RevPAR in any given period. So going forward, I think it's the same dynamic continues work from the cost side and work on improving our RevPAR just as the same gross margin.

就業務成本結構而言，我們繼續看到 EBITDA 利潤率不斷提高，單位成本不斷下降。因此，我們對迄今為止所取得的成功以及在成本方面取得的進展感到滿意。但同樣，這仍然是以 GM 百分比計算，受到任何特定時期 RevPAR 波動的影響。因此，展望未來，我認為同樣的動力是從成本方面繼續開展工作，並致力於提高我們的 RevPAR，就像毛利率一樣。

Understood. Thanks a lot.

明白了。多謝。

Okay.

好的。

Nick Jones, JMP Securities. Your line is open.

尼克瓊斯，JMP 證券。您的線路已開通。

Great, thanks for taking the questions. I guess two, one just as we think about the total portfolio versus to live units. I know that total portfolio is coming down, for kind of you're pulling some of the properties out of that. Is this kind of the right level to think about it going forward, another live units, you're kind of approaching 70%, a percentage of portfolio live. Do you kind of expect this number to stagnate for a little bit as you focus on free cash flow from here? And then I guess the second question is, how are you feeling about the balance sheet kind of given the macro environment and kind of what you see ahead from here?

太好了，感謝您提出問題。我猜是兩個，一個就像我們考慮總投資組合與實際單位一樣。我知道總投資組合正在下降，因為你正在從中撤出一些房產。這是考慮未來的正確水準嗎？當您關注這裡的自由現金流時，您是否預期這個數字會稍微停滯？然後我想第二個問題是，考慮到宏觀環境以及您對未來的展望，您對資產負債表有何看法？

Thanks.

謝謝。

Yeah, thanks so much, Nick. Francis here, I'll take the first question. So yeah, as you pointed out, the core focus is really on driving the business to cash flow positivity, and we've been beating the same drum since June of 2022, that really the story there will be to convert our existing contracted properties into live properties. And so we're not seeking out to go and find a lot of new properties, we're just focused on making sure the ones that have been signed were expenses already been deployed to go and identify these assets and opened them that those are done successfully.

是的，非常感謝，尼克。法蘭西斯在這裡，我來回答第一個問題。所以，是的，正如您所指出的，核心重點實際上是推動業務實現現金流正向，自2022 年6 月以來，我們一直在敲響同樣的鼓，這確實是將我們現有的合約財產轉變為即時屬性。因此，我們並不是要尋找大量新房產，我們只是專注於確保已簽署的房產已投入費用來識別這些資產並開放它們以確保這些資產已完成成功。

And of course, now also working on a portfolio optimization program and so our real estate team's effort is really focused on of ensuring that the portfolio economics as a whole are as strong as possible and that we work with our landlord partners to go and make these underperforming assets perform. I also want to point out that we've got still nearly 50% embedded growth, which we think is really exciting. Frankly, a lot of properties that we think are going to be really great assets for the brand for the guest experience and also add more dollars to on the contribution to the business are going to open in the next couple of years.

當然，現在也致力於投資組合優化計劃，因此我們的房地產團隊的努力真正集中在確保整個投資組合經濟性盡可能強大，並且我們與房東合作夥伴合作，使這些表現不佳的資產表現良好。我還想指出，我們仍然有近 50% 的嵌入成長，我們認為這確實令人興奮。坦白說，我們認為許多酒店將在未來幾年內開業，這些酒店將成為該品牌在賓客體驗方面的寶貴資產，並為業務做出更多貢獻。

And so we think that this industry-leading growth is actually quite exciting and the growth rate is not an issue for the business at this point, we're growing quite rapidly. It's really just doing everything we can to go and accelerate the timeline to cash flow positivity.

因此，我們認為這種行業領先的成長實際上非常令人興奮，而且成長率對於目前的業務來說不是問題，我們的成長速度相當快。實際上，我們只是盡一切努力加快現金流積極性的時間表。

And then on the live unit growth side, we just posted in this third quarter at 31% year-over-year growth of live units. And so we're really happy with that pace and we'll keep on you're focusing the team on improving that free cash flow performance of the business in the near term.

然後在活躍單位成長方面，我們剛剛在第三季公佈了活躍單位年增 31%。因此，我們對這種速度感到非常滿意，我們將繼續讓您的團隊專注於在短期內提高業務的自由現金流績效。

And also the balance sheet question, so you saw we had a healthy cash position at the end of the quarter. You see also the sustained progress we've been making on the free cash flow front. That trajectory, I think when you look at the individual is very telling and it's up into the right and that we're working hard on our plan to keep that going role live units as Francis just talked about, there's a lot of embedded growth in the model that we feel good about the unit economics of reducing property level costs, including improving the brand profile of these properties and then controlling pre-opening costs and overhead as we have in the past. And that's the recipe for us to continue to improve free cash flow and when you contrast that with where we're at with the balance sheet, we see a trajectory we're comfortable with.

還有資產負債表問題，所以你看到我們在季度末擁有健康的現金狀況。您還可以看到我們在自由現金流方面取得的持續進展。我認為，當你觀察個人時，這種軌跡非常有說服力，而且它是正確的，我們正在努力製定計劃，以使這一角色繼續存在，正如弗朗西斯剛才談到的那樣，有很多嵌入式增長我們對降低物業水平成本的單位經濟效益感到滿意的模型，包括提高這些物業的品牌形象，然後像過去一樣控制開業前成本和管理費用。這就是我們繼續改善自由現金流的秘訣，當你將其與我們的資產負債表進行對比時，我們會看到一個我們感到滿意的軌跡。

Great. Thank you both.

偉大的。謝謝你們倆。

Jed Kelly, Oppenheimer.

傑德凱利，奧本海默。

Hey great, thanks for taking my question. Could you just give us an update on how your RevPAR initiatives in the technology around revenue management is trending then I know it's relatively early and you don't want to guide the next year, but can you sort of give us what you're sort of looking for and what you think for '24 looks like? Thanks.

嘿，太好了，感謝您提出我的問題。您能否向我們介紹一下您在收入管理技術方面的 RevPAR 計劃的最新趨勢？ '24 是什麼樣子？謝謝。

Thanks so much, Jed. I think that I'll start with the revenue management question. I think it's an incredibly important topic, it's a very important lever for the profitability of the business. And frankly, I think that we have we have room for improvement on our pricing strategy. One of the changes that we've recently initiated is to ensure that our pricing trajectories are more stable and by that, what I'm I mean that within 7 days or 14 days before target dates, we would go and reduce price to drive more occupancy and we actually think that's not the right approach and building a base of occupancy earlier into the booking window, but then holding price as we approach that date of arrival is actually on better strategy to drive stronger ADRs and stronger RevPARs.

非常感謝，傑德。我想我將從收入管理問題開始。我認為這是一個非常重要的主題，它是企業獲利能力的一個非常重要的槓桿。坦白說，我認為我們的定價策略還有改進的空間。我們最近發起的變革之一是確保我們的定價軌跡更加穩定，我的意思是在目標日期前 7 天或 14 天內，我們會降低價格以推動更多事實上，我們認為這不是正確的方法，在預訂窗口早期建立入住基礎，但在接近抵達日期時保持價格實際上是更好的策略，可以推動更強勁的ADR 和更強的RevPAR。

So that's a major change that we're initiating. I think there are some dates where we've been selling out a little bit too early, and that's caused our capacity to yield optimally to be impaired, and so those are just a few tweaks that you can expect that we're going to we're going to put to work in the next few months and quarters. And all of that, of course, is powered by a lot of technology, we've built much of this technology in-house, and we're not afraid to also benchmark our technology versus third parties and to always explore whether our solutions are the most adequate. But really the biggest opportunity as we see it in the near term, as does is this price trajectory, the sellouts and ensuring that we can optimally drive RevPAR through higher ADR.

這是我們正在發起的一項重大變革。我認為在某些日期我們賣得有點太早了，這導致我們最佳收益率的能力受到損害，所以這些只是你可以預期我們將進行的一些調整將在接下來的幾個月和幾個季度投入工作。當然，這一切都是由大量技術提供支援的，我們已經在內部建立了大部分技術，我們不害怕將我們的技術與第三方進行基準測試，並始終探索我們的解決方案是否適合最充足的。但正如我們在短期內看到的那樣，這確實是最大的機會，價格軌跡、銷售以及確保我們能夠透過更高的平均房價以最佳方式推動每間客房收入也是如此。

And Jed, I'll take your question on '24, obviously, it's still too early for us to guide on '24 [quarterly], we're finalizing our '24 plans. As we speak, we still got a few more weeks to go to, button all of that. The other thing is the property optimization program -- the portfolio optimization program that Francis described earlier. This is very much in our, early innings. We feel confident it we'll improve the trajectory meaningfully, but for now, there's too many unknowns for us to embed any guidance based on that.

傑德，我將在 24 年回答你的問題，顯然，現在對我們來說指導 24 年[季度]還為時過早，我們正在最終確定 24 年計劃。就在我們說話的時候，我們還有幾週的時間完成這一切。另一件事是財產優化計劃——弗朗西斯之前描述的投資組合優化計劃。這很大程度上是在我們的早期階段。我們相信我們將有意義地改善軌跡，但就目前而言，我們有太多的未知數，無法在此基礎上嵌入任何指導。

And then the last thing I'll say is similar to my answer to the prior question. I'll point you back to the trajectory, you see the trajectory of improvements. I illustrated earlier the ingredients behind that improvement and those we expect to continue to work hard and sustain going forward and right now, that's how we're framing '24 at a high level and a continued improvement in the trajectory and working on the key levers to deliver that. But no formal guidance at this point, more to come in the next month.

我要說的最後一件事與我對上一個問題的回答類似。我會引導你回到軌跡，你會看到改進的軌跡。我之前闡述了這種改進背後的要素，以及我們期望繼續努力並繼續前進的要素，現在，這就是我們如何在高水平上構建“24”，持續改進軌跡並致力於關鍵槓桿交付那個。但目前還沒有正式的指導，下個月將會有更多指導。

Thank you.

謝謝。

Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Francis Davidson for any closing remarks.

謝謝。目前我在隊列中沒有顯示任何其他問題。我現在想將電話轉回給弗朗西斯·戴維森，請他發表結束語。

Well, I just wanted to say thank you to all of our listeners and participants for joining the call today. We look forward to speaking with you in early 2024 and share our fourth quarter and full year 2022 results. So, thanks very much, everyone, for dialing in.

好吧，我只是想對今天加入電話會議的所有聽眾和參與者表示感謝。我們期待在 2024 年初與您交談並分享我們第四季度和 2022 年全年的業績。所以，非常感謝大家撥電話。

This concludes today's program. Thank you all for participating. You may now disconnect.

今天的節目到此結束。感謝大家的參與。您現在可以斷開連線。