This year will be a “transition year” in which vacation rental management company Vacasa sets itself up for “long-term, measured, profitable growth in the future,” CEO Rob Greyber says in the earnings call discussing fourth-quarter and full-year 2022 financial results.
While Vacasa was operating in a hyper-growth environment the past few years, according to Greyber, now the company is operating in a more “dynamic environment.” Vacasa became a public company in late 2021, and Greyber became CEO in September 2022.
Greyber says he is optimistic about Vacasa’s long-term potential and sees challenges that “are fixable, but not yet fixed.”
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The company’s priorities are shifting to improving efficiency and developing processes “to deliver an unmatched experience for our homeowners and elevated hospitality for our guests,” he says. Specifically, Vacasa is refining its local market operations, individual sales approach and product roadmap to strengthen its competitive advantage.
“Yes, it will take time, but we are making these decisions to firm up the foundation of our business, which we believe sets us up for long-term profitable growth,” Greyber says.
“The most exciting part to me is there are only a handful of other companies even attempting to win in this market at scale.”
To put itself on a path to adjusted EBITDA profitability, Greyber says the company “made the difficult decision” in January to reduce its workforce by approximately 1,300, about 17% of employees. Vacasa reduced approximately 300 positions on the corporate side, the majority in sales and marketing. It also reduced about 1,000 field positions.
The layoffs followed a drop in adjusted EBITDA in the third quarter of 2022 compared with the same period in 2021.
Greyber has recently appointed four executives: a chief commercial officer to lead the sales team, a chief product and technology officer, a chief legal officer and chief marketing officer.
“Each of these executives brings significant and directly relevant experience from across the technology and online travel landscapes,” he says, “and I’m excited about the leadership team we’ve assembled.”
CFO Jamie Cohen says there are no plans for further layoffs.
Cohen also reports some positive figures for the company. Gross booking value reached $416 million in the fourth quarter of 2022 - up 10% year-over-year. Nights sold hit 1.1 million in Q4, up 5% from the same period in 2021.
Fourth-quarter revenue climbed to $218 million, an increase of 14% year over year. The company’s revenue comes primarily from commissions from homeowners and guest fees.
However, net loss was $302 million in the fourth quarter of 2022 compared with $118 million in the same period in 2021.
Adjusted EBITDA was negative $49 million in Q4, compared with negative $68 million the year before.
“Our adjusted EBITDA finished ahead of expectations due to a combination of better than anticipated revenue and our ability to scale down local market resources to appropriate levels that matched guest demand faster than anticipated,” Cohen says.
Sales and marketing expense was $50 million, or 23% of revenue, in the fourth quarter, compared with $73 million, or 38% of revenue, the year prior.
Vacasa expects gross booking value per home to decline year over year in 2023. One factor leading to the decline is the rise in “churn,” or number of homes leaving the platform, that began in Q4 and has continued this year, according to Cohen.
“We believe at least part of the elevated churn is due to homeowner rental income coming off of the record highs experienced over the past few years,” she says.
“Given our focus on profitability, we believe full-year 2023 revenue will decline by low-double digit to high-single digit percentage year-over-year,” primarily driven by a projected reduction in gross booking value per home versus last year, reduced investment in its portfolio program and the wind down of real estate brokerage services.
Meanwhile, Cohen says, Vacasa aims to achieve slight adjusted EBITDA profitability for the year.
Founded in 2009, the Portland-based company offers more than 40,000 homes across more than 500 destinations in the United States, Belize, Canada, Costa Rica and Mexico. In addition to offering direct bookings on its website and app, Vacasa provides inventory to channel partners such as Airbnb, Booking.com and Vrbo.