Vacasa reports record Q3 results before imminent SPAC merger

US: Portland-based vacation rental management platform Vacasa has followed the lead of Airbnb by announcing record-setting financial results for a third quarter, which ended on 30 September.

In addition, the company provided an update on its upcoming SPAC merger with special purpose acquisition company TPG Pace Solutions, revealing that it currently expects to close the proposed business combination by the end of this year. Vacasa’s Form S-4 was approved by the United States Securities and Exchange Commission on 10 November, though the merger will only be completed after the TPGS shareholder vote takes place on 30 November.

Vacasa announced in July that it was set to go public via a SPAC merger which would give the company a pro forma equity valuation of approximately $4.5 billion. In addition, the business is due to receive $485 million in fresh funding which it plans to use to stimulate future growth.

Now in its latest quarterly financial results, Vacasa has reported that its Q3 gross booking value, revenue and adjusted EBITDA reached their highest levels ever and thus exceeded the targets set out in an investor presentation filed by TPGS.

According to Vacasa, gross booking value rose to $776 million in Q3, a 97 per cent year-on-year increase on the same period in 2020, while revenue surged to an all-time high of $330 million, representing a 77 per cent year-on-year increase on the same period a year ago and coming out 28 per cent ahead of its original $258 million target.

Furthermore, the number of nights sold by the company shot up from 1.1 million in Q3 2020 to 1.8 million in Q3 2021, net income grew from $9 million in 2020 to $33 million this year, and adjusted EBITDA rose from $25 million to $57 million in the space of 12 months.

Taking that and the trends it has observed into account, Vacasa revealed that it had raised its full-year 2021 revenue guidance and that it now expects revenue to be in the range of $872 million to $877 million, 16 per cent above its prior target. It also raised its full-year adjusted EBITDA guidance to be in a range of negative $45 million to negative $40 million, between ten and 20 per cent higher than its original objective.

Vacasa CEO Matt Roberts said: “We generated record results in the third quarter, driven by a combination of consumers’ continued desire to travel, the ongoing preference shift towards vacation rentals, and strong execution across our entire organisation. While guest demand is the leading driver of our outperformance, we’ve had solid supply additions through both our individual and portfolio approaches in 2021.

“We now have more than 35,000 homes on our platform, in-line with the expectations we outlined when we announced our transaction with TPGS, and are the largest vacation rental management platform in North America,” he added.

Looking ahead, the company says that it expects to make some investments in Q4 that were originally scheduled for Q3 due to the “outperformance” of its business in Q2 and Q3 and the timing of a new brand advertising campaign.

Meanwhile, over the next 12 months, Vacasa expressed its confidence that consumer demand trends would persist and result in a continued shift in preference towards the vacation rental segment. In particular, the “work from anywhere” trend looks set to continue the acceleration of adoption of vacation rentals above pre-pandemic levels.

Vacasa CFO Jamie Cohen said: “A strong consumer demand environment allowed us to achieve high occupancy and record levels of gross booking value per night sold, up 19 per cent year-over-year, leading to third quarter revenue and adjusted EBITDA coming in well ahead of our targets. As we indicated in September, we are investing the outperformance from the second and third quarters back into the business during the fourth quarter through a brand advertising campaign and a pull forward of hiring to drive growth as we enter 2022.

“Even with the investments in the fourth quarter, we are still expecting to deliver full-year 2021 adjusted EBITDA about ten to 20 per cent better than our target,” she added.

Roberts continued: “With the business performing exceptionally well, we are raising our revenue guidance and now expect full-year 2021 revenue to come in more than $100 million ahead of our initial target. Based on everything we’ve seen to date, we are more confident that occupancy and gross booking value per night sold will remain above pre-pandemic levels in 2022.

“As a result of this and the investments we are making, we expect full-year 2022 revenue to finish ahead of our target and look forward to sharing a more detailed 2022 outlook when we report fourth quarter results,” he added.

In recent weeks, the firm has rolled out a number of product updates, including an AI-driven, itinerary based pricing algorithm update to enable it to maximise income for its homeowners, smart home technology which leverages proprietary, in-home technology devices to create an elevated guest experience and drive operational efficiencies, and a Probability of Booking feature to help homeowners understand the probability of a guest booking their home on a given night along with the projected associated income.

Earlier this month, Vacasa released its homeowner app in order to connect homeowners with insight into the management, care and performance of their vacation rental home. The app was seen as a key addition to the company’s suite of technologies to professionalise the vacation rental experience for homeowners and guests alike.

Vacasa manages more than 35,000 homes in over 400 destinations in North America, Belize and Costa Rica.