UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| (Mark One) | |||||
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended | |||||
| or | |||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from_________to ________
Commission File Number: 001-41130
(Exact name of registrant as specified in its charter)
_________________________
_________________________
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices)(Zip Code) | ||
( | ||
| (Registrant's telephone number, including area code) | ||
| N/A | ||
| (Former name, former address and former fiscal year, if changed since last report) | ||
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | |||||
Non-accelerated filer ☐ | Smaller reporting company | ||||
Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of November 4, 2024, 15,705,353 shares of the registrant's Class A Common Stock were outstanding, 6,749,584 shares of the registrant's Class B Common Stock were outstanding, and 316,666 shares of the registrant's Class G Common Stock were outstanding.
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| Table of Contents | |||||
| Page | |||||
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q ("Quarterly Report") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our results of operations, financial position, growth strategy, seasonality, business strategy, policies, and approach, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Without limiting the foregoing, in some cases, you can identify forward-looking statements by terms such as “aim,” “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. No forward-looking statement is a guarantee of future results, performance, or achievements, and one should avoid placing undue reliance on such statements.
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Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such beliefs and assumptions may or may not prove to be correct. Additionally, such forward-looking statements are subject to a number of known and unknown risks, uncertainties, and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to:
•our ability to execute our business plan and achieve the expected benefits of the Reorganization (as defined below) and other cost saving measures we may take in the future;
•any indebtedness we may incur from time to time (including the Convertible Notes (as defined below)), our cash position, and our ability to raise additional capital or generate the significant capital necessary to expand our operations and invest in new offerings, including that additional financing (including any Convertible Notes) may not be available on acceptable terms or at all, or could be dilutive to our stockholders or impose additional restrictive debt covenants on our activities;
•our ability to achieve profitability;
•our ability to manage the impacts the Reorganization will have on our systems, processes, and controls, including our ability to address competitive challenges, manage our employee base, or maintain our corporate culture;
•our past growth may not be indicative of our future prospects;
•our ability to compete in our industry;
•our ability to attract and retain homeowners and guests;
•our ability to provide high-quality customer service;
•our ability to develop new or enhanced offerings and services;
•our ability to maintain and enhance relationships with distribution partners;
•our ability to cost-effectively drive traffic to our platform;
•our ability to maintain and enhance our brand and reputation, and avoid negative publicity that could damage our brand;
•the safety or perception of safety of our platform and services;
•our ability to manage our international operations;
•our ability to consummate or successfully integrate recent and future acquisitions;
•our ability to raise additional capital or generate the significant capital necessary to expand our operations and invest in new offerings;
•our ability to attract and retain capable management and employees;
•increased personnel costs or labor shortages;
•declines or disruptions to the travel and hospitality industries or general economic downturns;
•the effects of seasonal and other trends on our results of operations;
•our ability to obtain adequate insurance coverage for the needs of our business;
•any future impairment of our long-lived assets or goodwill;
•significant fluctuations in our results of operations from quarter to quarter and year to year as a result of seasonality and other factors;
•operational metrics subject to inherent challenges in measurement and real or perceived inaccuracies;
•upticks or downturns in bookings are not immediately reflected in our results of operations;
•our ability to manage funds held on behalf of customers;
•our expectations regarding our tax liabilities and the adequacy of our reserves;
•any undetected errors on our platform;
•reliance on third-party service providers in connection with key aspects of our platform and operations;
•our ability to adapt to changes in technology and the evolving demands of homeowners and guests;
•our ability to protect our intellectual property and our data;
•our use of "open source" software;
•our use of artificial intelligence, or AI, in our business and risks related to cyberattacks, data security breaches, or other security incidents;
•our ability to stay in compliance with laws and regulations, including tax laws, that currently apply or may become applicable to our business both in the United States and internationally and our expectations regarding the impact of various laws, regulations, and restrictions that relate to our business;
•risks related to the ownership of our Class A Common Stock, including the significant influence our principal stockholders and holders of our Convertible Notes have over the Company; and
•those risks, uncertainties, and assumptions identified in Part I, Item 1A. "Risk Factors" and Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 Annual Report"), in Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Part II, Item 1A. "Risk Factors" of our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2024 and June 30, 2024, and Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Part II, Item 1A. "Risk Factors" in this Quarterly Report, and in our subsequent filings with the Securities and Exchange Commission.
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There may be additional risks that we currently consider immaterial or which are unknown. It is not possible to predict or identify all such risks.
The forward-looking statements in this Quarterly Report are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, investors are cautioned not to unduly rely upon these statements, and our actual future results, levels of activity, performance, and achievements may be materially different from what we expect.
These forward-looking statements speak only as of the date of this Quarterly Report. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of any new information, future events, or otherwise.
Basis of Presentation
Vacasa, Inc. was incorporated on July 1, 2021 under the laws of the state of Delaware as a wholly owned subsidiary of Vacasa Holdings LLC ("Vacasa Holdings") for the purpose of consummating the business combination described herein. In December 2021, Vacasa, Inc. merged with TPG Pace Solutions Corp., with Vacasa, Inc. continuing as the surviving entity, following which Vacasa, Inc. consummated a series of reorganization transactions through which Vacasa, Inc. became the sole manager and owner of approximately 50.3% of the outstanding equity interests in Vacasa Holdings, and Vacasa Holdings cancelled its ownership interest in Vacasa, Inc. The business combination was accounted for as a reverse recapitalization (the "Reverse Recapitalization") in accordance with accounting principles generally accepted in the United States of America ("GAAP"). For the period from inception to December 6, 2021, Vacasa, Inc. had no operations, assets or liabilities. Unless otherwise indicated, the financial information included herein is that of Vacasa Holdings, which, following the business combination, became the business of Vacasa, Inc. and its subsidiaries.
Additionally, unless the context otherwise requires, references herein to the “Company,” “we,” “us,” or “our” refer (a) after December 6, 2021, to Vacasa, Inc. and its consolidated subsidiaries and (b) prior to December 6, 2021, to Vacasa Holdings and its consolidated subsidiaries.
Risk Factor Summary
Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report and in Part I, Item 1A. "Risk Factors" in our 2023 Annual Report. You should carefully consider these risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include, but are not limited to, the following:
•our ability to execute our business plan and achieve the expected benefits of the Reorganization and other cost saving measures we may take in the future;
•any indebtedness we may incur from time to time (including the Convertible Notes (as defined below)), our cash position, and our ability to raise additional capital or generate the significant capital necessary to expand our operations and invest in new offerings, including that additional financing may not be available on acceptable terms or at all, or could be dilutive to our stockholders or impose additional restrictive debt covenants on our activities;
•our ability to achieve profitability;
•our ability to manage the impacts the Reorganization will have on our systems, processes, and controls, including our ability to address competitive challenges, manage our employee base, or maintain our corporate culture;
•our past growth may not be indicative of our future prospects;
•our ability to appropriately manage the strain to our business brought by its rapid historical growth, and our ability to improve our systems, processes and controls;
•our ability to compete in our industry;
•our ability to attract and retain homeowners and guests;
•our ability to provide high-quality customer service;
•our ability to maintain and enhance relationships with distribution partners;
•our ability to develop new or enhanced offerings and services;
•our ability to cost-effectively drive traffic to our platform;
•our ability to maintain and enhance our brand and reputation, and avoid negative publicity that could damage our brand;
•the safety or perception of safety of our platform and services;
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•our ability to manage our international operations;
•our ability to consummate or successfully integrate recent and future acquisitions;
•our ability to attract and retain capable management and employees;
•increased personnel costs or labor shortages;
•any decline or disruption to the travel and hospitality industries or economic downturn, natural disasters, local and global public health emergencies, geopolitical conflict, and other catastrophic events or other events outside of our control;
•risks related to localized events in states and regions where our managed units are concentrated;
•our ability to obtain adequate insurance for the needs of our business;
•a future impairment of our long-lived assets or goodwill;
•significant fluctuations in our results of operations from period to period, as a result of seasonality and other factors;
•certain operational metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation;
•upticks or downturns in bookings are not immediately reflected in our results of operations;
•any failure to properly manage funds held on behalf of customers;
•our reliance on third-party payment service providers to process payments made by guests and certain payments made to homeowners on our platform;
•risks related to payment network rules and any material modification of our payment card acceptance privileges;
•uncertainty in the application of taxes to our homeowners, guests, or platform;
•exposure to greater than anticipated tax liabilities;
•changes in tax laws or tax rulings;
•our ability to use our net operating loss carryforwards and certain other tax attributes;
•our dependence upon distributions from Vacasa Holdings LLC ("OpCo") to pay taxes and other expenses;
•we may incur certain tax liabilities attributable to the Blockers (as defined below) as a result of the Business Combination (as defined below);
•we may bear certain tax liabilities that are attributable to audit adjustments for taxable periods (or portions thereof) ending prior to the Business Combination, or that are disproportionate to our ownership interest in OpCo in the taxable period for which the relevant adjustment is imposed;
•Vacasa, Inc. will be required to pay the TRA Parties (as defined below) for certain tax benefits it may claim (or is deemed to realize) in the future;
•our ability to comply with federal, state, and foreign laws relating to privacy and data protection;
•risks related to cyberattacks, data security breaches, or other security incidents;
•our reliance primarily on Amazon Web Services to host and deliver our platform and on a number of other third-party service providers in connection with other key aspects of our platform and operations;
•any undetected errors in our platform, system capacity constraints, system or operational failures, or denial-of-service or other attacks;
•our ability to operate effectively on platforms other than desktop computers;
•our ability to adapt to changes in technology and the evolving demands of homeowners and guests;
•our ability to protect our intellectual property and our data;
•risks related to claims that we or others violated certain third-party intellectual property rights;
•risks related to our use of “open source” software;
•risks related to our use of artificial intelligence;
•risks related to laws, regulations, and rules that affect the short-term rental business;
•risk related to complex, evolving, and sometimes inconsistent and ambiguous laws and regulations that may adversely impact our operations and discourage homeowners and guests from using our services;
•our reliance on a mix of independent contractors and employees to provide operational services to us and any potential reclassification of independent contractors as deemed employees;
•risk related to regulatory audits, inquiries, litigation, and other disputes;
•liability for information or content that is on, or accessible through, our platform;
•risks related to governmental economic and trade sanctions laws and regulations; and violation of anti-corruption laws;
•our Certificate of Incorporation provides that the doctrine of “corporate opportunity” will not apply with respect to any director or stockholder who is not employed by us or our subsidiaries;
•our focus on the long-term best interests of our company and our consideration of all of our stakeholders;
•our principal stockholders and holders of our Convertible Notes have significant influence over us;
•volatility in the trading price of the shares of our Class A Common Stock;
•future sales of our Class A Common Stock in the public market, including as a result of any conversion of the Convertible Notes;
•our status as an “emerging growth company” within the meaning of the Securities Act; and
•our expectation not to pay any cash dividends on our Class A Common Stock in the foreseeable future.
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
Vacasa, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
(unaudited)
| As of September 30, | As of December 31, | ||||||||||
| 2024 | 2023 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Accounts receivable, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Other long-term assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities, Temporary Equity, and Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Funds payable to owners | |||||||||||
| Hospitality and sales taxes payable | |||||||||||
| Deferred revenue | |||||||||||
| Future stay credits | |||||||||||
| Accrued expenses and other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
Long-term debt, net of current portion ($ | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | $ | $ | |||||||||
| Commitments and contingencies (Note 13) | |||||||||||
| Redeemable noncontrolling interests | |||||||||||
| Equity: | |||||||||||
Class A Common Stock, par value $ | |||||||||||
Class B Common Stock, par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total equity | |||||||||||
| Total liabilities, temporary equity, and equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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Vacasa, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share data)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Cost of revenue, exclusive of depreciation and amortization shown separately below | |||||||||||||||||||||||
| Operations and support | |||||||||||||||||||||||
| Technology and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Depreciation | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Impairment of long-lived assets | |||||||||||||||||||||||
| Impairment of goodwill | |||||||||||||||||||||||
| Total operating costs and expenses | |||||||||||||||||||||||
| Income (loss) from operations | ( | ( | ( | ||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Income (loss) before income taxes | ( | ( | ( | ||||||||||||||||||||
| Income tax benefit (expense) | ( | ||||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Less: Net income (loss) attributable to redeemable noncontrolling interests | ( | ( | ( | ||||||||||||||||||||
| Net income (loss) attributable to Class A Common Stockholders | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Net income (loss) per share of Class A Common Stock: | |||||||||||||||||||||||
| Basic | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Diluted | ( | ( | ( | ||||||||||||||||||||
| Weighted-average shares of Class A Common Stock used to compute net income (loss) per share: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
Vacasa, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net Income (loss) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ( | ( | |||||||||||||||||||
| Total comprehensive income (loss) | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Less: Comprehensive income (loss) attributable to redeemable noncontrolling interests | ( | ( | ( | ||||||||||||||||||||
| Total comprehensive income (loss) attributable to Class A Common Stockholders | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
9
Vacasa, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash from operating activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||
| Credit loss expense | |||||||||||
| Depreciation | |||||||||||
| Amortization of intangible assets | |||||||||||
| Impairment of long-lived assets | |||||||||||
| Impairment of goodwill | |||||||||||
| Impairment of right-of-use assets | |||||||||||
| Future stay credit breakage | ( | ( | |||||||||
| Reduction in the carrying amount of right-of-use assets | |||||||||||
| Deferred income taxes | ( | ||||||||||
| Other gains and losses | ( | ||||||||||
| Fair value adjustment on financial instruments remeasured at fair value through earnings | ( | ( | |||||||||
| Convertible Notes and Notes Option issuance costs expensed as incurred | |||||||||||
| Non-cash interest expense | |||||||||||
| Equity-based compensation expense | |||||||||||
| Change in operating assets and liabilities, net of assets acquired and liabilities assumed: | |||||||||||
| Accounts receivable | ( | ||||||||||
| Prepaid expenses and other assets | |||||||||||
| Accounts payable | |||||||||||
| Funds payable to owners | ( | ( | |||||||||
| Hospitality and sales taxes payable | ( | ( | |||||||||
| Deferred revenue and future stay credits | ( | ( | |||||||||
| Operating lease obligations | ( | ( | |||||||||
| Accrued expenses and other liabilities | |||||||||||
| Net cash (used in) provided by operating activities | ( | ||||||||||
| Cash from investing activities: | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Cash paid for internally developed software | ( | ( | |||||||||
| Cash paid for business combinations, net of cash and restricted cash acquired | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash from financing activities: | |||||||||||
| Cash paid for business combinations | ( | ( | |||||||||
| Cash paid for issuance costs from Convertible Notes and Notes Option | ( | ||||||||||
| Payments of long-term debt | ( | ( | |||||||||
| Proceeds from exercise of stock options | |||||||||||
| Proceeds from (payments to) Employee Stock Purchase Program, net of refunds | ( | ||||||||||
| Proceeds from borrowings on revolving credit facility | |||||||||||
| Proceeds from borrowings on Convertible Notes and Notes Option | |||||||||||
| Repayment of borrowings on revolving credit facility | ( | ||||||||||
| Repayment of financed insurance premiums | ( | ( | |||||||||
| Other financing activities | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
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Vacasa, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash | ( | ( | |||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | ||||||||||
| Cash, cash equivalents, and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | $ | |||||||||
| Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for income taxes, net of refunds | $ | $ | |||||||||
| Cash paid for interest | |||||||||||
| Cash paid for operating lease liabilities | |||||||||||
| Supplemental disclosures of non-cash activities: | |||||||||||
| Financed insurance premiums | |||||||||||
| Lease liabilities exchanged for right-of-use assets | |||||||||||
| Issuance of Class A Common Stock for Convertible Notes | |||||||||||
| Reconciliation of cash, cash equivalents and restricted cash: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
11
Vacasa, Inc.
Condensed Consolidated Statements of Equity (Deficit)
(in thousands, except share and unit data)
(unaudited)
| Redeemable Non-controlling Interests | Class A Common Stock | Class B Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||
| Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | |||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Vesting of employee equity units | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Class A Common Stock for Convertible Note | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of equity-based awards | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Redemption of OpCo units and retirement of Class B Common Stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interest to redemption amount | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
| Vesting of employee equity units | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Class A Common Stock for Convertible Note | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Redemption of OpCo units and retirement of Class B Common Stock | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | |||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||||||||||||||||||||
| Adjustment of redeemable noncontrolling interest to redemption amount | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2024 | $ | $ | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
12
Vacasa, Inc.
Condensed Consolidated Statements of Equity (Deficit)
(in thousands, except share and unit data)
(unaudited)
| Redeemable Non-controlling Interests | Class A Common Stock | Class B Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||
| Amount | Shares | Amount | Shares | Amount | Amount | Amount | Amount | Amount | ||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Vesting of employee equity units | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of equity-based awards | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of shares under the ESPP | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption of OpCo units and retirement of Class B Common Stock | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
| Vesting of employee equity units | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of equity-based awards | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Redemption of OpCo units and retirement of Class B Common Stock | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
13
| Index to Notes to Condensed Consolidated Financial Statements | ||||||||
| Page | ||||||||
| Note 1: | ||||||||
| Note 2: | ||||||||
| Note 3: | ||||||||
| Note 4: | ||||||||
| Note 5: | ||||||||
| Note 6: | ||||||||
| Note 7: | ||||||||
| Note 8: | ||||||||
| Note 9: | ||||||||
| Note 10: | ||||||||
| Note 11: | ||||||||
| Note 12: | ||||||||
| Note 13: | ||||||||
| Note 14: | ||||||||
14
Vacasa, Inc. and its subsidiaries (the "Company") operate a vertically integrated vacation rental platform. Homeowners utilize the Company’s technology and services to realize income from their rental assets. Guests from around the world utilize the Company’s technology and services to search for and book Vacasa-listed properties in the United States, Belize, Canada, Costa Rica, and Mexico. The Company collects nightly rent on behalf of homeowners and earns the majority of its revenue from commissions on rent and from additional reservation-related fees paid by guests when a vacation rental is booked directly through the Company’s website or app or through its distribution partners. The Company conducts its business through Vacasa Holdings LLC ("Vacasa Holdings" or "OpCo") and its subsidiaries. The Company is headquartered in Portland, Oregon.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with GAAP and the rules and regulations of the Securities and Exchange Commission ("SEC"). These condensed consolidated financial statements include the accounts of the Company, its wholly-owned or majority-owned subsidiaries, and entities in which the Company is deemed to have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model. All intercompany balances and transactions have been eliminated in consolidation. The financial information as of December 31, 2023 contained in this Quarterly Report is derived from the audited consolidated financial statements and notes included in the Company's 2023 Annual Report, which should be read in conjunction with these condensed consolidated financial statements. Certain information in footnote disclosures normally included in annual financial statements was condensed or omitted for the interim periods presented in accordance with GAAP. In the opinion of management, the interim data includes all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The interim results of operations and cash flows are not necessarily indicative of those results and cash flows expected for the year.
As of September 30, 2024, the Company held 15,822,273 units of Vacasa Holdings ("OpCo Units"), which represented an ownership interest of approximately 70 %. The portion of the consolidated subsidiaries not owned by the Company and any related activity is eliminated through redeemable noncontrolling interests in the condensed consolidated balance sheets and net income (loss) attributable to redeemable noncontrolling interests in the condensed consolidated statements of operations.
The Company is an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), which permits the Company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. As of January 1, 2022, the Company elected to irrevocably opt out of the extended transition period.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions reflected in the condensed consolidated financial statements include, but are not limited to, the useful lives of property and equipment and intangible assets, allowance for credit losses, valuation of assets acquired and liabilities assumed in business acquisitions and related contingent consideration, valuation of redeemable convertible preferred units, valuation of equity-based compensation, valuation of goodwill, valuation of long-lived assets, and valuation of financial instruments remeasured at fair value through earnings. Actual results may differ materially from such estimates. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s condensed consolidated financial statements will be affected.
Risks and Uncertainties
Liquidity
Since the Company's founding, its principal sources of liquidity have been from proceeds received through the issuance of equity and debt financing. The Company has incurred significant operating losses and generated negative cash flows from operations as it has invested to support the growth of the business. To execute on its strategic initiatives, the Company has and will continue to incur operating losses and generate negative cash flows from operations on an annual basis now and in the future, and as a result, will require and continue to need additional capital resources.
15
As of September 30, 2024, we had cash and cash equivalents of $124.4 million. We experienced more variable and generally weaker demand than is typical in the nine months ended September 30, 2024 and, as a result, our cash position did not build as expected in the period.
On May 7, 2024, the Board of Directors of the Company approved a workforce reduction and reorganization plan (the “Reorganization”), see Note 14, Workforce Reductions, which is intended to, among other things, reduce certain fixed costs in the business, promote greater efficiency, and realign its business and strategic priorities as a way to accelerate the transformation of the business to a model focused more on local market accountability and execution. This plan involves significant structural changes to the way the Company runs its business, including a significant reduction in our corporate personnel and functions. Although the Company believes the Reorganization and associated operational changes will improve the long-term efficacy of its business model by empowering the local markets, streamlining corporate functions, and better position it for profitability and to generate free cash flow over the long term, the implementation and execution of the Reorganization measures are subject to significant risks and uncertainties, including whether the Company has targeted the appropriate areas for its cost-saving efforts and at the appropriate scale. If the Reorganization plan is not successful, the Company may not realize all or any of the anticipated benefits, which could adversely affect the business, financial condition, and results of operations, including its liquidity position and ability to raise additional capital.
The Company’s primary requirements for liquidity and capital are to finance working capital requirements, capital expenditures, and other general corporate purposes. As a result of the significant fluctuations in the Company's cash position, continued decreases in the number of homes on our platform, lower guest demand, changes in booking patterns, and the potential impact of the Reorganization on the business, the Company sought opportunities for additional capital. On May 8, 2024, the Company drew $81.0 million under the Revolving Credit Facility (defined in Note 8, Debt), which is subject to financial covenants (see Note 8, Debt). On August 7, 2024, a subsidiary of the Company issued $30.0 million of Convertible Notes (as defined in Note 8, Debt) to supplement our cash position.
The Company continues to assess its liquidity position and opportunities for additional capital, which may be obtained through additional equity offerings, which would dilute the ownership of the Company's existing stockholders, or additional debt financings, which may contain covenants that restrict the operations of the business or otherwise contain terms unfavorable or dilutive to the business and its existing stockholders. In the event that additional financing is required from outside sources, the Company may not be able to raise the financing on terms acceptable to the Company or at all. If the Company is unable to raise additional capital when desired, its business, financial condition, and results of operations could be adversely affected.
The Company expects to continue to fund operations primarily through use of its cash and cash equivalents, debt financing, and equity offerings. The Company believes its existing sources of liquidity will be sufficient to fund operations, working capital requirements, capital expenditures, and service debt obligations for at least the next 12 months as of the date of this filing.
Significant Accounting Policies
Except as identified below, there were no changes to the accounting policies disclosed in Note 2, Significant Accounting Policies of the Company's 2023 Annual Report that had a material impact on the Company's condensed consolidated financial statements and related notes.
Impairment of Long-lived Assets
The Company evaluates its long-lived assets or asset groups for indicators of possible impairment by comparing the carrying amount to future net undiscounted cash flows expected to be generated by such asset or asset group, including upon its eventual disposal, when events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. If the carrying amount of the long-lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined primarily using the estimated cash flows discounted at a rate commensurate with the risk involved and based on assumptions representative of market participants. The Company recorded long-lived asset impairment charges of $84.0 million and $46.0 million during the nine months ended September 30, 2024 and 2023, respectively. Refer to Note 6, Intangible Assets, Net and Goodwill, for additional information.
Convertible Notes
The Company determined the Convertible Notes (as defined in Note 8, Debt) were eligible for the fair value option and made such election to account for the Initial Notes (as defined in Note 8, Debt) entirely at fair value. The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. Additional Notes (as defined
16
in Note 8, Debt) may be issued in subsequent periods where the Company would be able to make a fair value option election upon issuance provided eligibility criteria are met. The Company records the portion of the Convertible Notes that are issued and outstanding for accounting purposes at fair value with changes in fair value recorded in other income (expense), net in the condensed consolidated statement of operations, except for the portion of the total change in fair value that results from a change in the instrument-specific credit risk of the Convertible Notes, which is recorded in other comprehensive income (loss). The fair value option election was made to align the accounting for the Convertible Notes with the Company's financial reporting objectives and reduce operational effort to account for embedded features that otherwise would require bifurcation as a separate unit of account.
Pursuant to the fair value option election, direct and incremental debt issuance costs and consideration paid to the lender related to the Convertible Notes were expensed as incurred and recorded in other income (expense), net in the condensed consolidated statements of operations. Measurement of the change in fair value of the Convertible Notes includes accrued interest, whether paid-in-kind or cash.
Notes Option Liability
The Notes Option (as defined below) granted in conjunction with the Convertible Notes described in Note 8, Debt, is an equity-linked financial instrument required to be recognized as a liability remeasured through earnings. The Company records the Notes Option liability at fair value with changes in fair value recorded in other income (expense), net in the condensed consolidated statements of operations.
Accounting Pronouncements Adopted in Fiscal 2024
The Company has not adopted any recent accounting pronouncements that have had a material impact on the Company's financial position, results of operations, or cash flows in fiscal 2024.
Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, that modifies the disclosure and presentation requirements of reportable segments. The new guidance requires the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit and loss. In addition, the new guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. We are in the process of evaluating the impact of adopting this new guidance on our consolidated financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, to improve its income tax disclosure requirements. Under the new guidance, public business entities must annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate). The new guidance is effective for public business entities for annual periods beginning after December 15, 2024. We are in the process of evaluating the impact of adopting this new guidance on our consolidated financial statement disclosures.
17
Revenue Disaggregation
A disaggregation of the Company’s revenues by nature of the Company’s performance obligations is as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Vacation rental platform | $ | $ | $ | $ | |||||||||||||||||||
| Other services | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Contract Liability Balances
Contract liability balances on the Company’s condensed consolidated balance sheets consist of deferred revenue for amounts collected in advance of a guest stay, limited to the amount of the booking to which the Company expects to be entitled as revenue. The Company’s deferred revenue balances exclude funds payable to owners and hospitality and sales taxes payable, as those amounts will not result in revenue recognition. Deferred revenue is recognized into revenue over the period in which a guest completes a stay. Substantially all of the deferred revenue balances at the end of each period are expected to be recognized as revenue within the subsequent 12 months.
Costs to Obtain a Contract
The Company capitalizes certain costs it incurs to obtain new homeowner contracts when those costs are expected to be recovered through revenue generated from that contract. Capitalized amounts are amortized on a straight-line basis over the estimated life of the customer through sales and marketing expenses in the condensed consolidated statements of operations. Costs to obtain a contract, net of accumulated amortization, capitalized as of September 30, 2024 and December 31, 2023 were $31.8 million and $34.8 million, respectively, and were recorded as a component of prepaid expenses and other current assets and other long-term assets in the condensed consolidated balance sheets. The amount of amortization recorded for the three and nine months ended September 30, 2024 was $3.7 million and $11.2 million, respectively. The amount of amortization recorded for the three and nine months ended September 30, 2023 was $2.2 million and $6.0 million, respectively.
Allowance for Credit Losses
As of September 30, 2024 and December 31, 2023, the Company’s allowance for credit losses related to accounts receivable was $13.2 million and $11.7 million, respectively. For the three and nine months ended September 30, 2024, the Company recognized credit loss expense of $0.9 million and $3.0 million, respectively, which was recorded as a component of general and administrative expense in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2023, the Company recognized credit loss expense of $0.9 million and $2.7 million, respectively, which was recorded as a component of general and administrative expense in the condensed consolidated statements of operations.
The following tables set forth the Company's financial liabilities that were measured at fair value on a recurring basis (in thousands):
| As of September 30, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Contingent consideration | $ | $ | $ | $ | |||||||||||||||||||
Class G Common Stock(1) | |||||||||||||||||||||||
| Convertible Notes | |||||||||||||||||||||||
| Notes Option Liability | |||||||||||||||||||||||
18
| As of December 31, 2023 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Contingent consideration | $ | $ | $ | $ | |||||||||||||||||||
Class G Common Stock(1) | |||||||||||||||||||||||
(1) For more information, see Note 13, Equity of our 2023 Annual Report.
The carrying amounts of certain financial instruments, including cash equivalents, restricted cash, accounts receivable, accounts payable, and borrowings under our Revolving Credit Facility (defined in Note 8, Debt) approximate fair value due to their short-term maturities and are excluded from the fair value tables above.
Level 3 instruments consist of contingent consideration obligations related to acquired businesses, the liabilities for contingent earnout share consideration represented by the Company's Class G Common Stock, and the Convertible Notes and Notes Option Liability.
Contingent Consideration
The contingent consideration obligations are recorded in accrued expenses and other current liabilities and other long-term liabilities on the condensed consolidated balance sheets. The fair value of the contingent consideration is estimated utilizing an income approach and based on the Company's expectation of achieving the contractually defined homeowner contract conversion and retention targets at the acquisition date. The Company assesses the fair value of these obligations at each reporting date thereafter with any changes reflected as gains and losses in general and administrative expenses in the condensed consolidated statements of operations. The charges for changes in fair value of the contingent consideration were not material for the three and nine months ended September 30, 2024 and 2023.
Class G Common Stock
The contingent earnout share consideration represented by the Company's Class G Common Stock is recorded in other long-term liabilities on the condensed consolidated balance sheets. The fair value of the Class G Common Stock is estimated on a recurring basis using the Monte Carlo simulation method. The fair value is based on the simulated stock price of the Company over the remaining term of the shares. Pursuant to the Amended and Restated Certificate of Incorporation, the Class G Common Stock is automatically converted to Class A shares at certain conversion ratios upon the occurrence of their respective triggering events. Inputs used to determine the estimated fair value of the Class G Common Stock include the remaining contractual term of the shares, the risk-free rate, the volatility of comparable companies over the remaining term, and the price of the Company's Class A Common Stock. The Company assesses the fair value of the Class G Common Stock at each reporting date with any changes reflected within other income, net in the condensed consolidated statements of operations. The charges for changes in fair value of the Class G Common Stock were not material for the three and nine months ended September 30, 2024 and 2023.
Convertible Notes and Notes Option Liability
The Convertible Notes are valued using a binomial lattice model within a probability-weighted framework with respect to certain redemption features. The following assumptions were used in determining the fair value of the Convertible Notes as of the issuance date and September 30, 2024:
| As of August 7, 2024 | As of September 30, 2024 | ||||||||||
| Risk Free Rate | % | % | |||||||||
| Discount Rate | % | % | |||||||||
| Volatility | % | % | |||||||||
| Share Price | $ | $ | |||||||||
The Notes Option liability is valued using a lattice model that incorporates optionality of the fixed interest rate and conversion price of the underlying convertible debt.
19
The following table presents a summary of the change in fair value of Convertible Notes and Notes Option liability:
Convertible Notes(1) | Notes Option(2) | ||||||||||
| Fair value as of June 30, 2024 | $ | $ | |||||||||
| Fair value as of the date of issuance | $ | $ | |||||||||
| Change in fair value measurement | $ | ( | $ | ( | |||||||
| Fair value as of September 30, 2024 | $ | $ | |||||||||
(1) The Convertible Notes are recorded within long-term debt, net of current portion on the condensed consolidated balance sheets and the change in fair value measurement associated with the Convertible Notes is recorded within other income, net on the condensed consolidated statements of operations.
(2) The Notes Option is recorded within accrued expenses and other current liabilities on the condensed consolidated balance sheets and the change in fair value measurement associated with the Notes Option is recorded within other income, net on the condensed consolidated statements of operations.
Impairment of Long-Lived Assets
During the nine months ended September 30, 2024 and 2023, the Company recorded long-lived asset impairment charges of $84.0 million and $46.0 million, respectively. The fair value estimate of the Company's homeowner contract assets was classified in Level 3 of the fair value hierarchy due to the significance of unobservable inputs developed using Company-specific information. For more information on the impairment of long-lived assets, refer to Note 6, Intangible Assets, Net and Goodwill.
Impairment of Right-of-Use Assets
Property and equipment, net consisted of the following (in thousands):
| As of September 30, | As of December 31, | ||||||||||
| 2024 | 2023 | ||||||||||
| Land | $ | $ | |||||||||
| Buildings and building improvements | |||||||||||
| Leasehold improvements | |||||||||||
| Computer equipment | |||||||||||
| Furniture, fixtures, and other | |||||||||||
| Vehicles | |||||||||||
| Internal-use software | |||||||||||
| Total | |||||||||||
| Less: Accumulated depreciation | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
20
Intangible assets, net consisted of the following (in thousands):
| Weighted Average Useful Life Remaining (in years) | As of September 30, 2024 | ||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Impairment | Net Carrying Amount | ||||||||||||||||||||||||||
Homeowner contracts(1) | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
| Databases, photos, and property listings | ( | ||||||||||||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||||||||
Other(2) | ( | ||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
| Weighted Average Useful Life Remaining (in years) | As of December 31, 2023 | ||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Impairment | Net Carrying Amount | ||||||||||||||||||||||||||
Homeowner contracts(1) | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
| Databases, photos, and property listings | ( | ||||||||||||||||||||||||||||
| Trade names | ( | ||||||||||||||||||||||||||||
Other(2) | ( | ||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||
(1) The homeowner contracts balance as of September 30, 2024 is net of accumulated impairment losses of $130.0 million that were recorded during the third quarter of fiscal year 2023 and the first quarter of fiscal year 2024. The homeowner contracts balance as of December 31, 2023 is net of accumulated impairment losses of $46.0 million that were recorded during the third quarter of fiscal year 2023.
(2) Other intangible assets consist primarily of non-compete agreements, websites, and domain names.
The Company's estimated future amortization of intangible assets as of September 30, 2024 is expected to be as follows (in thousands):
| Year Ending December 31: | Amount | ||||
| Remainder of 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| Total | $ | ||||
The following table summarizes the changes in the Company's goodwill balance (in thousands):
| Nine Months Ended September 30, | |||||
| 2024 | |||||
Balance at beginning of period(1) | $ | ||||
| Foreign exchange translation and other | ( | ||||
Balance at end of period(1) | $ | ||||
21
(1) Goodwill is net of accumulated impairment losses of $655.1 million that were recorded to the Company's single reporting unit in prior periods.
Impairment
During the first quarter of 2024, the Company saw significant declines in Gross Booking Value ("GBV") and Nights Sold. The declines are attributable to volatile guest demand and guest bookings. Further, the Company continued to experience a sustained decline in stock price. Based on these factors, the Company concluded the events and changes in circumstances indicated an impairment may exist (the "triggering event") and conducted quantitative impairment assessments of long-lived assets and goodwill as of March 31, 2024. No triggering event was identified as of September 30, 2024.
Impairment of Long-lived Assets
The Company evaluates its long-lived assets or asset groups for indicators of possible impairment by comparing the carrying amount to future net undiscounted cash flows expected to be generated by such asset or asset group, including upon its eventual disposal (the "recoverability test"), when there is a triggering event. The Company determined its long-lived assets represent one asset group for purposes of long-lived asset impairment. Based on the results of the recoverability test as of March 31, 2024, the Company concluded the carrying value of the single asset group was not recoverable. To allocate and recognize the impairment charge, the Company determined the individual fair value of the long-lived assets.
As of March 31, 2024, the carrying value of the Company's homeowner contracts exceeded the fair value, resulting in a long-lived asset impairment charge of $84.0 million. No impairment was recognized on the remaining long-lived assets, as their carrying values did not exceed their fair values. The Company estimated the fair value of the homeowner contracts based on the present value of estimated future cash flows, which the Company considers to be a Level 3 unobservable input in the fair value hierarchy. The Company prepared cash flow projections based on management's estimates of future revenue and operating margins, taking into consideration the historical performance and the current macroeconomic, industry, and market conditions. The Company based the discount rate on the weighted-average cost of capital considering Company-specific characteristics and changes in the reporting unit's projected cash flows.
Impairment of Goodwill
The Company reviews goodwill for impairment annually, as of the first day of the fourth quarter, and more frequently if events or changes in circumstances indicate an impairment may exist. Based on the triggering event identified above, the Company conducted a quantitative goodwill impairment assessment as of March 31, 2024. The goodwill impairment assessment did not result in goodwill impairment charges as of March 31, 2024 as the fair value estimate of the Company's single reporting unit exceeded its carrying amount. The fair value estimate of the Company's single reporting unit was derived from a combination of an income approach and a market approach. Under the income approach, the Company estimated the fair value of the reporting unit based on the present value of estimated future cash flows, which the Company considers to be a Level 3 unobservable input in the fair value hierarchy. The Company prepared cash flow projections based on management's estimates of future revenue and operating margins, taking into consideration the historical performance and the current macroeconomic, industry, and market conditions. The Company based the discount rate on the weighted-average cost of capital considering Company-specific characteristics and changes in the reporting unit's projected cash flows. Under the market approach, the Company estimated the fair value of the reporting unit based on revenue market multiples derived from comparable publicly traded companies with similar characteristics as the reporting unit, as well as an estimated control premium. No triggering event was identified as of September 30, 2024.
Potential indicators of impairment include significant changes in performance relative to expected operating results, significant negative industry or economic trends, or a significant decline in the Company's stock price and/or market capitalization for a sustained period of time. It is reasonably possible that one or more impairment indicators could occur or intensify in the near term, which may result in further impairment of long-lived assets or goodwill.
22
Accrued expenses and other current liabilities consisted of the following (in thousands):
| As of September 30, | As of December 31, | |||||||||||||
| 2024 | 2023 | |||||||||||||
| Employee-related accruals | $ | $ | ||||||||||||
| Homeowner reserves | ||||||||||||||
Current portion of acquisition liabilities(1) | ||||||||||||||
| Current portion of operating lease liabilities | ||||||||||||||
Other(2) | ||||||||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||||||||
(1) The current portion of acquisition liabilities includes contingent consideration and deferred payments to sellers due within one year.
(2) Other includes legal contingencies. Refer to Note 13, Commitments and Contingencies for additional information.
The Company's debt obligations consisted of the following (in thousands):
| As of September 30, | As of December 31, | ||||||||||
| 2024 | 2023 | ||||||||||
| Insurance premium financing | $ | $ | |||||||||
| Revolving credit facility | $ | $ | |||||||||
| Convertible notes | $ | $ | |||||||||
| Total debt | |||||||||||
Less: current maturities(1) | ( | ||||||||||
| Long-term portion | $ | $ | |||||||||
(1) Current maturities of debt are recorded within accrued expenses and other current liabilities on the condensed consolidated balance sheets.
Insurance Premium Financing
The Company previously entered into short-term agreements to finance certain insurance premiums. As of September 30, 2024, the Company's insurance premium financing agreements had lapsed, and no corresponding liability remained.
Revolving Credit Facility
In October 2021, Vacasa Holdings, LLC and its wholly owned subsidiary (the "Borrower") and certain of its subsidiaries (collectively, the "Guarantors") entered into a credit agreement with JPMorgan Chase Bank, N.A. and the other lenders party thereto from time to time.
The credit agreement, as subsequently amended in December 2021, June 2023, and October 2024 (as amended, the "Credit Agreement"; capitalized terms used herein and not otherwise defined are used as defined in the Credit Agreement), provides for a senior secured revolving credit facility in an aggregate principal amount of $105.0 million ("Revolving Credit Facility"). The Revolving Credit Facility includes a sub-facility for letters of credit in aggregate face amount of $40.0 million, which reduces borrowing availability under the Revolving Credit Facility. Proceeds may be used for working capital and general corporate purposes.
The June 2023 amendment modified the Credit Agreement to replace the LIBOR-based reference rate options with Adjusted Term Secured Overnight Financing Rate ("SOFR") based reference rate options. Subsequent to the amendment, any borrowings under the Revolving Credit Facility are subject to interest, determined as follows:
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•Alternate Base Rate ("ABR") borrowings accrue interest at a rate per annum equal to the ABR plus a margin of 1.50 %. The ABR is equal to the greatest of (i) the Prime Rate, (ii) the New York Federal Reserve Bank Rate plus 0.50 %, and (iii) the Adjusted Term SOFR for a one-month interest period plus 1.00 %.
•Term SOFR borrowings accrue interest at a rate per annum equal to the Adjusted Term SOFR plus a margin of 2.50 %. Adjusted Term SOFR means, for any Interest Period, an interest rate per annum equal to the Term SOFR for such Interest Period.
Subsequent to the October 2024 amendment, ABR borrowings accrue interest at a rate per annum equal to the ABR plus a margin of 2.50 %, and Term SOFR borrowings accrue interest at a rate per annum equal to the Adjusted Term SOFR plus a margin of 3.50 %.
Borrowings under the Revolving Credit Facility do not amortize and are due and payable on October 7, 2026. Amounts outstanding under the Revolving Credit Facility may be voluntarily prepaid at any time and from time to time, in whole or in part, without premium or penalty. In addition to paying interest on the principal amounts outstanding under the Revolving Credit Facility, the Company is required to pay a commitment fee on unused amounts at a rate of 0.25 % per annum. The Company is also required to pay customary letter of credit and agency fees.
The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the ability of the Borrower and its restricted subsidiaries to:
•create, incur, assume or permit to exist any debt or liens;
•merge into or consolidate or amalgamate with any other person, or permit any other person to merge into or consolidate with it, or liquidate or dissolve;
•make or hold certain investments;
•sell, transfer, lease, license or otherwise dispose of its assets, including equity interests (and, in the case of restricted subsidiaries, the issuance of additional equity interests);
•pay dividends or make certain other restricted payments;
•substantively alter the character of the business of the Borrower and its restricted subsidiaries, taken as a whole; and
•sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its affiliates.
The October 2024 amendment, among other things, amended the minimum amount of consolidated revenue and the compliance thresholds that are measured on a trailing four-quarter basis, as of the last date of each fiscal quarter. The Borrower and its restricted subsidiaries are required to maintain a minimum amount of consolidated revenue, measured on a trailing four-quarter basis, as of the last date of each fiscal quarter, provided that such covenant will only apply if, on such date, the aggregate principal amount of outstanding borrowings under the Revolving Credit Facility and letters of credit (excluding undrawn amounts under any letters of credit in an aggregate face amount of up to $20.0 million and letters of credit that have been cash collateralized) exceeds 35 % of the then-outstanding revolving commitments. The Borrower is also required to maintain liquidity of at least $15.0 million as of the last date of each fiscal quarter beginning on June 30, 2022.
The obligations of the Borrower and certain guarantor subsidiaries (the "Guarantors") are secured by first-priority liens on substantially all of the assets of the Borrower and the Guarantors. As of September 30, 2024, there were $81.0 million in borrowings outstanding under the Revolving Credit Facility. As of December 31, 2023, there were no borrowings outstanding under the Revolving Credit Facility. As of September 30, 2024, there were $23.4 million of letters of credit issued under the Revolving Credit Facility, and $0.6 million was available for borrowings.
Convertible Notes
On August 7, 2024, the Company, and certain of its majority-owned subsidiaries entered into a note purchase agreement (as subsequently amended on October 25, 2024, the “Note Purchase Agreement”) with the purchaser thereof, DK VCSA Lender LLC (the "Purchaser"), an affiliate of Davidson Kempner Capital Management LP, and certain existing holders of the Company’s Class A Common Stock. The Note Purchase Agreement provides for the issuance and sale of up to $75.0 million aggregate principal amount of first lien senior secured convertible notes due 2029 (the “Convertible Notes”) to the Purchaser. The Convertible Notes are comprised of: (i) $30.0 million of notes (the "Initial Notes") issued on August 7, 2024 (the “Convertible Notes Funding Date”); (ii) up to $20.0 million of notes to be issued pursuant to an option granted by the Company to the Purchaser, which is exercisable at Purchaser’s option within six months after the Convertible Notes Funding Date, on the same terms and conditions as the Initial Notes (the “Notes Option” and the notes in respect thereof the "DK Option Notes"); and (iii) up to $25.0 million of notes to be issued pursuant to the mutual agreement of the Borrower and the Purchaser any time after the Convertible Notes Funding Date, but before the Convertible Notes Maturity Date (as defined below), on the same terms and conditions as the Initial Notes (the “Mutual Option Notes” and together with the DK Option Notes, the “Additional Notes”). In the event the Purchaser does not exercise the Notes Option, then the Company may issue the DK Option Notes to a third-party
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purchaser pursuant to the terms of the Note Purchase Agreement. Simultaneously with and pursuant to the Note Purchase Agreement, the Company and certain of its majority-owned subsidiaries, also entered into a collateral agreement (the “Collateral Agreement”) establishing a first priority lien on substantially all of the assets of Holdings, the borrower, and other guarantors, and entered into a guarantee agreement (the “Guarantee Agreement”) guaranteeing the Convertible Notes. The liens established under the Collateral Agreement are pari passu in priority with the liens under the Revolving Credit Facility. As of September 30, 2024, the principal balance outstanding of the Convertible Notes, including paid-in-kind interest settlements, was $30.5 million.
The Convertible Notes bear interest at an annual rate of 11.25 %, which is payable in kind for the first three years, by adding the amount of such accrued interest to the principal amount of the Convertible Notes; provided that, at the Borrower’s election, interest may be paid in cash at an annual rate of 9.75 %. Beginning on August 7, 2027, the Convertible Notes will bear interest at an annual rate equal to 9.75 % payable in cash. The Convertible Notes will mature on August 7, 2029 (the “Convertible Notes Maturity Date”), unless earlier repurchased, redeemed or converted. The Convertible Notes are guaranteed by Holdings and certain other current and future subsidiaries of the Company, and are secured by a first priority lien on substantially all of their respective assets (other than certain excluded assets).
The Convertible Notes are convertible, in whole and not in part (subject to certain limitations described below), into shares of the Company’s Class A Common Stock at the option of the Purchaser; provided, however, that in the event that any conversion of the Convertible Notes would trigger the change of control rules (as defined in the Convertible Notes), then the Convertible Notes shall be converted in part, at the maximum amount permitted without triggering such change of control rules. The initial conversion price of the Convertible Notes is $4.16 (the “Conversion Price”), which is subject to customary anti-dilution adjustments.
From and after August 7, 2027, the Company may redeem the Convertible Notes, in whole or in part, at a redemption price equal to 102 % of the aggregate principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest. In addition, from and after August 7, 2027, if the closing price per share of the Class A Common Stock exceeds 225 % of the Conversion Price for 20 out of 30 consecutive trading days, the Company may redeem all, but not less than all, of the Convertible Notes at a redemption price equal to 100 % of the principal amount to be redeemed, plus accrued and unpaid interest. Upon the consummation of a Major Transaction (as defined in the Note Purchase Agreement), the Company may also redeem all, but not less than all, of the Convertible Notes then outstanding in an amount equal to 130 % of the initial principal amount of the Convertible Notes to be redeemed, less all accrued interest previously paid in cash.
The Note Purchase Agreement includes customary negative covenants, subject to specified exceptions, including limits on the ability of the Company to incur additional debt. The Note Purchase Agreement also includes customary events of default, the occurrence of which may result in the acceleration of the maturity of the Convertible Notes. In addition, the Company may not permit (i) a certain liquidity threshold (as further defined in the Note Purchase Agreement) to be less than $15.0 million as of the last day of any test period (as defined in the Note Purchase Agreement) commencing with such test period ending on September 30, 2024 and (ii) a certain consolidated EBITDA metric (as further defined in the Note Purchase Agreement) of the Company to be less than $15.0 million as of the last day of any such test period commencing with such test period ending on December 31, 2026.
On the Convertible Notes Funding Date, the Company also issued to the Purchaser an aggregate of 174,825 shares of Class A Common Stock (the “Fee Shares”), representing payment in full of certain amounts payable to the Purchaser in respect of the Initial Notes pursuant to the Note Purchase Agreement.
The October 2024 amendment modified the Note Purchase Agreement to conform the terms of the Note Purchase Agreement to the Credit Agreement, as amended, to the extent they apply to the Note Purchase Agreement.
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Other long-term liabilities consisted of the following (in thousands):
| As of September 30, | As of December 31, | ||||||||||
| 2024 | 2023 | ||||||||||
Class G Common Stock(1) | $ | $ | |||||||||
Long-term portion of acquisition liabilities(2) | |||||||||||
| Long-term portion of operating lease liabilities | |||||||||||
| Other | |||||||||||
| Total other long-term liabilities | $ | $ | |||||||||
(1) For more information, see Note 13, Equity of our 2023 Annual Report.
The Company's effective tax rate was a 2 % benefit on pre-tax income for the three months ended September 30, 2024 and an 0 % benefit on pre-tax loss for the three months ended September 30, 2023. The Company's effective tax rate was a 0 % expense on pre-tax loss for the nine months ended September 30, 2024 and a 0 % benefit on pre-tax loss for the nine months ended September 30, 2023. The effective tax rate differs from our statutory rate in both periods due to the effect of flow-through entity income and losses for which the taxable income or loss is allocated to the Vacasa Holdings, LLC members and due to valuation allowance considerations.
Equity-Based Award Activities
Restricted Stock Units
A summary of the Restricted Stock Unit ("RSU") activity was as follows during the period indicated:
| Activity Type | Restricted Stock Units (in thousands) | Weighted Average Grant Date Fair Value | |||||||||
| Outstanding as of December 31, 2023 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding as of September 30, 2024 | |||||||||||
As of September 30, 2024, there was unrecognized compensation expense of $11.5 million related to unvested RSUs, which is expected to be recognized over a weighted-average period of 1.9 years.
Performance Stock Units
The Company has granted Performance Stock Units ("PSUs") to certain members of its leadership team, which vest based upon the achievement of performance criteria and requisite service. The performance criteria are based on the achievement of certain share price appreciation targets. Attainment of each share price appreciation target is measured based on either the trailing 45-day or 60-day average closing trading price of our Class A Common Stock or, in the event of a change in control, the amount per share of Class A Common Stock to be paid to a stockholder in connection with such change in control. For certain of the awards, depending on the performance achieved, the actual number of shares of Class A Common Stock issued to the holder may range from 0 % to 200 % of the target number of PSUs granted. The number of PSUs granted included in the table below is based on the maximum potential achievement for all awards. In the event that performance criteria and requisite service are not achieved, the corresponding portion of the PSUs that do not vest will be forfeited.
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A summary of the PSU activity was as follows during the period indicated:
| Activity Type | Performance Stock Units (in thousands) | Weighted Average Grant Date Fair Value | |||||||||
| Outstanding as of December 31, 2023 | $ | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding as of September 30, 2024 | |||||||||||
As of September 30, 2024, there was unrecognized compensation expense of $2.1 million related to unvested PSUs, which is expected to be recognized over a weighted-average period of 1.3 years.
Stock Appreciation Rights
A summary of the Stock Appreciation Rights ("SARs") activity was as follows during the period indicated:
| Activity Type | Stock Appreciation Rights (in thousands) | Weighted Average Exercise Price | |||||||||
| Outstanding as of December 31, 2023 | $ | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding as of September 30, 2024 | |||||||||||
As of September 30, 2024, there was less than $0.1 million of unrecognized compensation expense for the Company's SARs that will be recognized over a weighted-average remaining recognition period of 0.3 years. As of September 30, 2024, the Company's outstanding SARs had a weighted-average remaining contractual life of 3.9 years and no intrinsic value.
Stock Options
A summary of the stock options activity was as follows during the period indicated:
| Activity Type | Stock Options (in thousands) | Weighted Average Exercise Price | |||||||||
| Outstanding as of December 31, 2023 | $ | ||||||||||
| Exercised | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding as of September 30, 2024 | |||||||||||
As of September 30, 2024, there was less than $0.1 million of unrecognized compensation expense for the Company's stock options that will be recognized over a weighted-average remaining recognition period of 0.3 years. As of September 30, 2024, the Company's outstanding stock options had a weighted-average remaining contractual life of 2.5 years and no intrinsic value.
Employee Equity Units
A summary of the Vacasa Employee Holdings LLC employee equity units is as follows:
| Employee Equity Units (in thousands) | Weighted-Average Grant Date Fair Value | ||||||||||
| Unvested outstanding as of December 31, 2023 | $ | ||||||||||
| Vested | ( | ||||||||||
| Unvested outstanding as of September 30, 2024 | |||||||||||
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As of September 30, 2024, there was nominal unrecognized compensation expense related to unvested employee equity units, which is expected to be recognized over a weighted-average period of less than 0.1 years.
Employee Stock Purchase Plan
In connection with the Business Combination, the Company adopted the 2021 Nonqualified Employee Stock Purchase Plan ("ESPP"). Under the ESPP, eligible participants may purchase shares of the Company’s Class A Common Stock using payroll deductions, which may not exceed 15 % of their total cash compensation. Offering and purchase periods begin on June 1 and December 1 of each year. Participants will be granted the right to purchase shares at a price per share that is 85 % of the lesser of the fair market value of the shares at (i) the participant’s entry date into the applicable one-year offering period or (ii) the end of each six-month purchase period within the offering period.
The ESPP does not meet the criteria of Section 423 of the Internal Revenue Code and is considered a non-qualified plan for federal tax purposes. The Company has treated the ESPP as a compensatory plan under GAAP.
During both the three and nine months ended September 30, 2024, there were no no ESPP options outstanding as of September 30, 2024.
Equity-Based Compensation Expense
The Company recorded equity-based compensation expense for the periods presented in the condensed consolidated statements of operations as follows (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Cost of revenue | $ | $ | $ | $ | |||||||||||||||||||
| Operations and support | |||||||||||||||||||||||
| Technology and development | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Total equity-based compensation expense | $ | $ | $ | $ | |||||||||||||||||||
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The Company calculates net income (loss) per share of Class A Common Stock in accordance with ASC 260, Earnings Per Share ("ASC 260"), which requires the presentation of basic and diluted net income (loss) per share. Basic net income (loss) per share is calculated by dividing net income (loss) attributable to Vacasa, Inc. by the weighted-average shares of Class A Common Stock outstanding without the consideration for potentially dilutive shares of common stock. Diluted net income (loss) per share represents basic net income (loss) per share adjusted to include the potentially dilutive effect of RSUs, PSUs, SARs, stock options, employee equity units, Convertible Notes, Notes Option, and Class G Common Stock. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of Class A Common Stock equivalents outstanding for the period determined using the treasury stock method and if-converted method, as applicable. During periods of net loss, diluted loss per share is equal to basic net loss per share because the antidilutive effect of potential shares of common stock is disregarded.
On August 7, 2024 the Company issued the Convertible Notes, which qualify as participating securities under ASC 260 because the holders have participation rights on an as-if-converted basis. Accordingly, basic EPS is determined using the two-class method and diluted EPS is determined using the more dilutive of the two-class method or diluted EPS determined using the treasury stock method and if-converted method, as applicable. Determination of the numerator adjustment under the two-class method considers the dilutive impact of income allocable to noncontrolling interest holders because of Vacasa Holdings’ contractual obligation to issue OpCo units to Vacasa, Inc. upon issuance of Class A Common Stock by Vacasa, Inc.
The following is a reconciliation of basic and diluted income (loss) per share of Class A Common Stock for the periods presented (in thousands, except per share data):
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Numerator for earnings (loss) per share calculation: | |||||||||||||||||||||||
| Net income (loss) | ( | ( | ( | ||||||||||||||||||||
Net income attributable to participating securities(1) | ( | ||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interest holders assuming allocation to participating securities(1) | ( | ||||||||||||||||||||||
| Net income (loss) attributable to Class A Common Stockholders, basic | ( | ( | ( | ||||||||||||||||||||
| Net income allocated to dilutive securities | |||||||||||||||||||||||
| Unrealized gain on change in fair value of convertible notes | ( | ||||||||||||||||||||||
| Net income attributable to participating securities assumed converted | |||||||||||||||||||||||
| Net income (loss) attributable to Class A Common Stockholders, diluted | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Denominator for earnings (loss) per share calculation: | |||||||||||||||||||||||
Weighted-average shares outstanding, basic(2) | |||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Restricted stock units | |||||||||||||||||||||||