Hello, my name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Membership Collective Group Q3 2022 results conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, please press star one again. Please note you may also submit your questions through the webcast. Thank you. Thomas Allen, Chief Financial Officer, you may begin. Thank you for joining us today to discuss the Membership Collective Group's Q3 2022 financial results. My name is Thomas Allen, and I'm the Chief Financial Officer. I'm here this morning with Nick Jones, our founder, and Andrew Carnie, our President and incoming CEO. Some of today's statements may be forward-looking, and actual results may differ materially due to a number of risks and uncertainties, including those discussed in our most recent quarterly report on Form 10-Q filed today, November 16, 2022. Any forward-looking statements represent our views only as of today, and we assume no obligation to update any forward-looking statements if our views change. By now, you should have access to our Q3 2022 earnings release, which can be found at membershipcollectivegroup.com in the News and Events section. Additionally, we have posted our Q3 2022 earnings presentation, which can also be found in the News and Events section on our site. During the call, we will also refer to certain non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Reconciliation to the most comparable GAAP measures are available on today's earnings press release. Now let me hand it over to Nick. Thanks, Thomas, and good morning, everyone. I'm talking to you for the first time as just the founder and not the CEO. It was 4 years ago we hired Andrew Carnie to help me deliver the significant growth we had planned, and I'm so pleased to announce that he is now stepping into the CEO role. Well done, Andrew. Having worked closely with Andrew, I'm super confident that the MCG will go from strength to strength under his leadership, and I really look forward to working with him and the rest of the team to help support that success. As I step back from the day-to-day running of the company, I will focus on doing what I have loved doing for the last 27 years, designing new houses, keeping members at the heart of everything we do, and motivating our people. With my recent diagnosis and successful recovery from prostate cancer, I spoke with our executive chairman and the board and agreed the time was right for me to transition. Since I started Soho House, I've always been obsessed about what our members want, and I'm really proud of what we have achieved. Andrew, over to you. Thanks, Nick. I want to take a moment to thank you as you head into the next chapter as founder. You've set a really high bar when it comes to creating and scaling a global membership business, and I'm really humbled as I step into the role of CEO, and I'm excited to partner with you, Nick. This is a unique business with huge opportunities ahead of it. It has all come from Nick's original vision for Soho House, and my focus is on enhancing and growing our Membership while delivering greater profitability. To that end, I've spent the last few months with our Executive Chairman, Ron Burkle, Nick, and our senior team, putting together a plan based upon analyzing our business, how members are using the Houses, using focus groups, and our first global member survey. I will briefly touch on Q3 results before I give you a more detailed update on our future plans. Here are the things we continue to be proud of in the quarter. Soho House membership grew almost 30% year-over-year, and total MCG membership grew 46% year-over-year, both reaching record highs. Even with the extremely strong membership growth, our MCG wait list is at an all-time high and in terrific shape, reaching 85,000 by the end of the quarter, up from 82,000 last quarter. Retention remained at around 95% despite concerns of a tougher economic environment which shows how sticky our membership base really is. Total revenue grew almost 50%, around 75% at constant currency. Unfortunately, while our Adjusted EBITDA grew GBP 11 million year-over-year and GBP 5 million quarter-over-quarter to GBP 20 million, our profits are not where we'd like them to be, and we will do better, and it's our highest focus as a public company. Now getting on to our updated strategy. Going forward, we're focusing obsessively on two things, growing and enhancing the value of our membership and driving operational excellence to improve profitability, which in turn will drive higher shareholder returns. This will now involve a more streamlined and data-driven approach to reducing expenses without compromising what matters most to our members. On membership, we plan to expand our physical footprint more efficiently by providing members with unique experiences and exceptional service. We need to be more targeted in giving our members what they really want and in the way we invest in the member experience. This will involve a greater focus on the Soho House business as the key driver of future growth and improved profitability. That's not to say we're not excited about our other existing businesses. Scorpios just came off its best season ever while Soho Home sales grew around 90% in October. However, more of my time will be focused on the core Soho House business. Secondly, we're really pleased with how we continue to deliver membership and top-line growth. We know we've more to do on profitability, and we're announcing a series of initiatives today that will help drive enhanced profitability, and more on that shortly. We believe we can deliver a first-class member experience while also being relentless on optimizing revenues, improving margins and our profits. We've always been a business that is centered around what members want. In our recent first global member survey, members told us we get a lot of things right. They love getting access to our houses around the world. Not surprising, given our membership is around 80% Every House membership. They love the design of our clubs, the atmospheres we create, and the members that we bring together and the events we host. That said, we'll be working through some of the things they'd like to see us improve, specifically in service, programming of greater choice of events and a broader food offering. They also said they love us opening new houses, but opening them well. We have opened 5 new houses this year and demand has been very strong. Nashville already has over 2,500 members, Brighton 1,500 and Holloway House over 1,000, and Copenhagen and Balham approaching 1,000, all ahead of our typical maturation curves, which has houses starting at 750 members and ramping up to 1,500 at the end of the first year. We're on track to deliver 7 new Soho Houses in 2022, which includes 2 further openings slated before year-end, Miami Pool House and Stockholm. While this is down slightly from our prior guidance of 9, we've decided to delay Bangkok and Mexico City to make sure we give members the best possible experience from day one, and we expect both houses to open in early 2023. To give members the best possible experience and to ensure reduced pressure on the organization, we are returning to our previous target of five to seven new houses a year, and this is in line with our already signed pipeline for the next three years. At the same time, our Cities Without Houses offer will continue to provide a clear path for longer term growth at a minimal expense to the company. As part of prioritizing the right investments for our business and our members, we are no longer pursuing the external digital membership. Now on to driving operational excellence to improve profitability. We are taking some immediate actions to ensure we give our members what they want, but do so in a more efficient way. Let me run you through a few of them. We are reducing our in-house operating expenses. Post-COVID, we rushed to get all our Houses open as quickly as possible in the manner we were used to operating them. In addition, it was a tough and unpredictable labor market, which meant our costs increased significantly. What we've learned is our members are using our Houses just as much, but at different times, so we're adjusting our cost base accordingly. Our recent global member survey highlighted that members place less value on aspects outside our Houses. With that in mind, we're refocusing our G&A with targeted reductions on content, digital and other corporate expenses without impacting the member experience. For example, we are reducing our editorial content spend by about 40% going forward. We can raise prices, but the real opportunity is to run a more efficient business. One final example, in recent months, we've found additional sizable opportunities across all our F&B procurement. The intention behind these actions is to enhance member value and drive profits for the business. If these do not fill those goals, then we will not pursue them. These changes will take time to feed through and the benefits will principally start to be felt in 2023 onwards. We are confident that this will help us generate stronger, more consistent earnings going forward and achieving above 10% Adjusted EBITDA margins in 2023. Now let me pass it on to Thomas to give you more detail on Q3 results and updated guidance. Thanks, Andrew. Total revenue grew almost 50% or approximately 75% at constant currency. Revenues beat consensus expectations despite $10 million of additional FX headwinds compared to when we last guided. Membership, in-house and other revenues rose 39%, 62% and 41% year-over-year respectively, or over 60%, 90% and 65% in constant currency. Membership and in-house revenue came in line with consensus despite additional FX headwinds, while other revenue beat. House level contribution increased 36% year-over-year, but disappointingly margins fell to approximately 200 basis points as we overcompensated on expenses, especially wages, as business volumes returned. Other contribution grew 66%, with margins increasing approximately 300 basis points, supported by strong results for Scorpios. Giving more details on revenue. Total membership revenue increased $20 million year-over-year, supported by strong growth in new house members, legacy house members and new membership. We also continue to benefit from the price increases earlier in the year and another reduction in frozen membership. Frozen members as a percentage of total members is now 1.4%, well below pre-Covid levels, highlighting the increased value for our members in having an active membership. In-house revenues grew $42 million year-over-year, benefiting from 6 new houses, stronger food and beverage demand, and 18% higher like-for-like RevPAR versus Q3 2021 and 23% higher than Q3 2019. Despite these increases, our average daily rate indexes suggest that we are still providing significant value to members with our bedrooms. Other revenues were up $25 million year-over-year, helped by strong Scorpios and Soho Home growth, public restaurants and townhouse revenues, and increased fees from our management contracts. We also opened The LINE San Francisco in the quarter. Our Q3 reported Adjusted EBITDA was $20 million, $5 million higher quarter-over-quarter and $11 million year-over-year as we benefited from continued strong membership and other revenue growth. However, our Adjusted EBITDA was below consensus, which was $26 million and similarly below our internal expectations. Versus when we guided last quarter of 2022, FX was approximately another $1 million headwind in 3Q, and we expect a relatively similar amount in 4Q. As Andrew mentioned earlier, we've continued to have to adjust to the shift in consumer behavior since COVID and in ways we overcompensated. If our Soho House wages as a% of revenue had been where we want them to be, we would have generated approximately $7 million of additional adjusted EBITDA in the quarter. On to guidance for the balance of this year, which reflects both the strong momentum in membership and retention we are seeing, as well as the challenges we have been having on the cost side. We are on track to deliver our total Soho House members target of 160,000-165,000 members by year-end, despite opening 2 fewer houses than we had previously expected. Looking at 2023, given our confidence from our wait list and retention, we are introducing year-end 2023 Soho House membership guidance of approximately 190,000 members in line with consensus. We are reiterating our 2022 membership and total revenue targets. This is despite the fact that when we last set guidance, we assumed the pound-dollar exchange rate would be $1.21 for the rest of the year, and the euro-dollar exchange rate would be $1.02. We had a $10 million FX hit to revenue in 3Q, and basing 4Q FX on banks' forecasts, expect another approximately $18 million impact in 4Q using $1.04 for pound-dollar and $0.95 for euro-dollar. On Adjusted EBITDA, we are cutting our guidance from $70 million-$80 million to $55 million-$60 million. Our 3Q EBITDA was disappointing, and while we have a clear plan in place, we expect it to take a few months to start to really show results. We expect to reach over 10% adjusted EBITDA margins in 2023. What would we like to leave you with today? It's been a good quarter for continued momentum in membership growth, recurring revenues and retention, with future demand through our wait list remaining very strong. We have clear strategic priorities in place to generate greater profit and free cash flow and in turn, drive shareholder returns. We are laser focused on delivering for our members and growing value of the membership experience. As Andrew said, we are confident we can deliver a first-class membership experience while also being relentless on optimizing revenues, improving margins, and generating higher profits. With that, we will now open up to questions. Operator, can we take the first question, please? As a reminder, you can either ask your questions over the phone or submit them over the webcast. Thank you. As a reminder to ask a question over the phone, please press star one on your telephone keypad. Our first question is from Shaun Kelley with Bank of America. Your line is open. Hi. Good afternoon, everyone. Thank you for all the color. Nick, you know, obviously you've been an inspiration to an entire generation here, so thanks for all your efforts and continue to look forward to see some of your vision coming together in some of the houses here. If I could, you know, I'm not sure if this is for Andrew or for Thomas, but could you just give us your, you know, your broader thoughts as we think about the impact at the House level of some of the operating changes you're contemplating here. You know, really what I'm thinking about is, you know, contribution margins, which clearly were a little disappointing with some of the headwinds in the Q3. Help us think about, you know, just sort of how you think about the four-wall, you know, model as we move out to 2023, and you start to optimize some of the things you wanna do. If labor is the key linchpin, help us balance that with obviously not compromising on service, which we know is pretty paramount here to the model. Yeah. I'll take that one, Shaun, and good to hear from you. If you think about coming out of COVID, we wanted our houses to be super prepared for our members when they came back, so we you know, in a very tough labor market. What we've realized over the last couple of months is that you know, our members are using our houses differently. The footfall is still the same. It's not greater than 2019, but they're slightly using them differently coming out of COVID. What we can be much more focused on and improve upon is optimizing our house wages and expenses based on when members visit our houses the most. That's one of our biggest things that we control, and we can do better on our rota rotation, our forecasting, optimizing when we open our houses and close our houses. Each house is different. We've analyzed each house in quite a lot of detail to come up with a plan that we're implementing. Second, if you think about our G&A, you know, we've been investing heavily over the last few years in our content platform, in a lot of our digital initiatives. Like I said on my prepared remarks, you know, we've spoken to a lot of members now, and they're less interested in that. That's the one area that we can really pull back on, which will help again on our costs and becoming more streamlined and efficient. Then secondly, or thirdly, as Thomas mentioned, we're going back to 5-7 houses a year. The reason we're doing that is we wanna take some pressure off our organization. We wanna be streamlined, we wanna have the right cost base, and 8-10 was putting too much pressure on for us. Those three things combined are meaningful for us and that's where that's forming the basis of our plan going forward into 2023. Maybe just as my follow-up, Thomas, might be for you, but just thinking about some of those G&A changes, you know, is this significant enough that, you know, G&A dollars could actually decline year over year? Maybe help us put some guideposts around what this could mean for the broader organization. I know it may be a little preliminary for guidance, but just any sort of ballpark or magnitude of what this could mean at the G&A level. Yeah, Shaun. Our actions are definitely being put in place to streamline SG&A or G&A. The problem that you have from looking at it on a consolidated basis is there are support offices broadly that are included in our consolidated numbers. If you think about next year, you know, we're expanding in Latin America, so that's gonna be included in G&A. But we are seeing meaningful savings there and, you know, and expect good number of savings in G&A. Thank you very much. The next question is from Sharon Zackfia with William Blair. Your line is open. Hi. Thank you. I guess I'm curious, given the state of the UK economy, if you could kind of touch on trends in the UK specifically, you know, how the wait list looks there, if you're seeing any change in kind of in-house behavioral patterns in the UK. Then I have a secondary question. I was a bit surprised that revenue guidance wasn't narrowed for the full year, given we have just one quarter left. Can you kind of give us your thoughts on that reiteration of what kind of implies a really broad range for the fourth quarter? I'll take the first part of your question, Sharon. Regarding the U.K., in Q3, our members were in our Houses higher than they were in 2019. We've not seen any change in our member behavior, so we're not seeing any recessionary behavior as it stands in our membership in the U.K. In fact, we actually grew quarter-on-quarter on our revenues and our spend. What we focus a lot on is the things that we can control, which is making sure we have the best service in our Houses, that we have value options for our members if they want them. Regarding our wait list, our wait list is, you know, our U.K. wait list is actually one of our strongest wait lists. We've got super great wait lists on every single house across the U.K. Our applications in Q3 are at record levels, pretty much in all our regions, but in particular the U.K. As we stand, we feel cautiously optimistic about our U.K. and our members. As always, we wanna make sure that we're delivering the best value, the best service, and the best experience for our members when they do come into the houses. Thomas, do you wanna answer the second part? Sharon, our key message from the quarter is that membership and revenue continue to have really strong momentum, and we continue to be on track to our full year guidance. I mean, I think on the revenue side, remember we guide to two things. We guide to total revenue and membership revenue. Both of them are feeling FX impacts, but as you can imagine, we feel good that we're performing well there. You know, I would say that we are gonna be well above the bottom of the ranges. Thank you. The next question is from Steven Zaccone with Citi. Your line is open. Great, good morning. Nick, best wishes in the new role, and congrats to you and Jill. I had a question on the change in strategy of the unit growth, like going back to 5-7 per year. How do you think about that in terms of differences by region? And then also in terms of, you know, smaller houses versus the, you know, the bigger properties that you know, like a farmhouse, for example. How do you think about that in terms of the differences? Yes. Well, I'll go first. Our strategy hasn't changed on the types of houses we're opening. That's all based on our CWH members that we have in each city that kind of define what type of house to put in there, be it a small, mid, or large house. That's fundamental to our growth. The only change that we've put in place, Steven, is we just wanna slow down. We wanna go back to the 5-7, which we articulated at the IPO. Because a part of generating more profits is that we wanna streamline things. What we found this year is that given all the challenges in the macro, be it supply chain, be it labor, even on opening houses, it just makes sense just to go to 5-7. 5-7 houses is still a lot of houses each year for our members to enjoy. We will continue with our tried and tested strategy of CWH and then figuring out what configuration of a house is suitable for that city. Just want to give a couple additional comments on the updated House guidance. I mean, if you think about it, we're on track to deliver 7 Houses this year, and we delivered 6 Houses last year. The 5-7 is in line with our signed pipeline for the next 3 years. You know, we think about next year, a lot of those projects are already underway. This is really relieving the burden on the company and allowing us to deliver on a plan that's already set. To give you a little bit more geographic color about next year, there's gonna be a big increase in the Americas. You know what we've found. As you know, one of our largest segment is North America now. We're expanding into Latin America with Mexico next year, and we're gonna continue to expand in the region. Okay, great. To go back to the other question about, you know, potential recession impact. I think, Nick, the last time we had the call, you talked a bit about how the business has performed in recessions in the past. I'm curious if you could just update on that topic. You know, what do you see in terms of member engagement during weaker economic environments? You know, do they visit the houses less? Do they actually visit a bit more? Just like, just talk through that impact. It'd be very helpful. Hi, Stephen. Well, yeah, I've been doing this for 27 years, and we've seen a number of slowdowns and recessions. What we've seen in the past is members actually, you know, go back to the houses even more because it's a home away from home. You know, I think people look at their subscriptions at times like this and go to the ones which they feel that they don't need so often or don't use so much. Soho House is one of those subscriptions, and we are a membership business, so we care deeply about our member. I think they look at it and say, "Oh, I'm gonna use that more." When they come into the house, you know, we're always sensitive to the economic conditions outside, so there's value items on the menu, et cetera. We in the last 2008, 2009, we saw growth in our membership, and no increase in people resigning our membership. I you know really think the membership side of this business is they're so loyal to us. They're so good to us, and we've never seen more people on our wait list. We've never seen applications higher. I think, you know, whatever the economic conditions are over the 12 months, that, in the past it hasn't harmed us, and I don't think it will harm us this time. Great. Thanks very much for the detail. Best of luck. Again, that's star one if you'd like to ask a question over the phone. The next question is from Stephen Grambling with Morgan Stanley. Your line is open. Thanks for taking the questions. Congrats, Andrew and Nick. Happy to hear about your recovery and wish you continued health. Now you all mentioned some record trends from Scorpios and you didn't really spend as much time on some of the other categories. How should we be thinking about the future growth and investment in some of these other areas, whether it's Home Plus, digital, Works, et cetera? Hi, Steven. We expect to continue to see growth in the other revenue. You know, we're continuing to expand in our management contracts. As we said, we opened up The LINE San Francisco in the quarter. We recently opened up another Ned this week actually. Home is continuing to grow. You know, we're gonna continue to see that other revenue line grow. I think our key message, though, is that, you know, we're trying to be more focused and really simplify the story. You know, more of our focus and efforts are really gonna be on the core Soho House business. Got it. One other follow-up. I guess you mentioned the reduced editorial. I guess how did you generally think about the value of content historically, and how do you anticipate the reduction will either impact the number of member touch points, or is it more about pruning ineffective content? Yeah, great question. Following our global member survey, what our members told us is that we spend a lot of time recapping our events globally. You know, when we have like Kendrick Lamar, who recently played in our houses, we would record it professionally, edit it, and then put it on our app. You know, that's quite a big cost for us. Our members don't want that. They've literally said, "We're less fussed about that. We actually want event programming going forward, and you to actually personalize it on our app, which is just written. Just tell us what events are coming up and what ones I should like based on what you know about me." It's little things like that that we can do that will actually help us streamline a lot of our expenses in our support offices. You know, we made the decision recently to stop pursuing digital membership. You know, after speaking to our members, they want us to focus on them. They do want connectivity, but actually they want connectivity more in the physical spaces and more in our houses more than ever before. That's what we're gonna focus our efforts on. It's all based on what our members are telling us, and what they're telling us is that they like some of the stuff that we're doing and some of the stuff we're not doing. That's great news because that's what we should be doing. I hope that makes sense. Yeah. Helpful. Thank you. We have no further questions over the phone at this time. We have one question that's sent in over the survey. What did you learn through the surveys and focus groups? Andrew? We learned a lot. The first thing that we learned is our members love us. They love what we're doing. They really value when we open new houses. They want us to open more around the world, which reflects on 80% of our members being Every House members. They love the events that we put on, both in the houses and outside the houses, and want us to be better about communicating that to them in the future, like I said. They're really satisfied with our app that we've obviously put a lot of investment over the last three years, but they want the app to be fantastic at booking and paying, booking their events, spa classes, bedrooms, and dining room reservations globally. They care less about the connectability and the content that I just mentioned. It was a really positive survey. The things that they want us to try and improve is service around all our houses, the speed of service, the quality of service, and they want us to have more diversity of food and differentiated food offerings across the different houses, which is great news for us, and we're already working on these plans. Thank you everyone for listening. If you have any follow-up questions, please feel free to reach out. Ladies and gentlemen, this concludes today's conference call and webcast. Thank you for participating. You may now disconnect.