Soho House (NYSE:SHCO) Misses Q4 Revenue Estimates
Stock Story
Published Mar 15, 2024 08:56AM ET
Updated Mar 15, 2024 09:30AM ET
Soho House (NYSE:SHCO) Misses Q4 Revenue Estimates
Social club operator Soho House (NYSE:SHCO) fell short of analysts' expectations in Q4 FY2023, with revenue up 7.5% year on year to $290.8 million. The company's full-year revenue guidance of $1.23 billion at the midpoint also came in 5.5% below analysts' estimates. It made a GAAP loss of $0.29 per share, down from its profit of $0.07 per share in the same quarter last year.
Is now the time to buy Soho House? Find out by reading the original article on StockStory.
Soho House (SHCO) Q4 FY2023 Highlights:
- Revenue: $290.8 million vs analyst estimates of $301.9 million (3.7% miss)
- EPS: -$0.29 vs analyst estimates of -$0.07 (-$0.22 miss)
- Management's revenue guidance for the upcoming financial year 2024 is $1.23 billion at the midpoint, missing analyst estimates by 5.5% and implying 7.8% growth (vs 18% in FY2023) (adjusted EBITDA guidance for the period also missed)
- Gross Margin (GAAP): 49.6%, up from 46.7% in the same quarter last year
- Free Cash Flow of $2.01 million, down 60.3% from the previous quarter
- Members: 259,884
- Market Capitalization: $1.12 billion
Hotels, Resorts and Cruise LinesHotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.
Sales Growth A company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. Soho House's annualized revenue growth rate of 13.9% over the last four years was decent for a consumer discretionary business.
Within consumer discretionary, a long-term historical view may miss a company riding a successful new property or emerging trend. That's why we also follow short-term performance. Soho House's annualized revenue growth of 42.3% over the last two years is above its four-year trend, suggesting some bright spots. We can better understand the company's revenue dynamics by analyzing its number of members, which reached 259,884 in the latest quarter. Over the last two years, Soho House's members averaged 21.9% year-on-year growth. Because this number is lower than its revenue growth during the same period, we can see the company's monetization has risen.
Get The News You Want
This quarter, Soho House's revenue grew 7.5% year on year to $290.8 million, missing Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 12.4% over the next 12 months, an acceleration from this quarter.
Cash Is KingAlthough earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can't use accounting profits to pay the bills.
While Soho House posted positive free cash flow this quarter, the broader story hasn't been so clean. Over the last two years, Soho House's demanding reinvestments to stay relevant with consumers have drained company resources. Its free cash flow margin has been among the worst in the consumer discretionary sector, averaging negative 3.7%.
Soho House broke even from a free cash flow perspective in Q4. This quarter's result was great for the business as its margin was 13.3 percentage points higher than in the same period last year. Over the next year, analysts predict Soho House will reach cash profitability. Their consensus estimates imply its LTM free cash flow margin of negative 1.6% will increase to positive 4.2%.
Key Takeaways from Soho House's Q4 Results We were impressed by how significantly Soho House blew past analysts' operating margin expectations this quarter. On the other hand, its full-year revenue and adjusted EBITDA guidance missed and its number of members fell short of Wall Street's estimates. Overall, this was a mixed quarter for Soho House. The stock is flat after reporting and currently trades at $5.75 per share.
Written By: Stock Story
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.