Executive Summary / Key Takeaways

• Membership-Driven Resilience: Soho House & Co. (SHCO) operates a unique global membership platform, demonstrating robust growth in its core Soho House membership, which provides a stable, recurring revenue base and underpins its business model. The company anticipates surpassing 210,000 Soho House members by year-end 2024.
• Strategic Operational Transformation: SHCO is undergoing a significant operational overhaul, including a new finance ERP system and corporate restructuring. While these initiatives have incurred short-term costs and impacted recent EBITDA, they are expected to drive substantial long-term efficiencies and enhance profitability beyond 2025.
• Diversified Growth Avenues: Beyond its core Houses, SHCO is strategically expanding its ecosystem through brands like Scorpios Beach Clubs and Soho Home, which are showing strong performance and significant growth potential, leveraging a digital-first approach for Soho Home.
• Navigating Macro Headwinds: The company has faced a "choppy revenue environment" in its in-house and other revenue streams due to macroeconomic conditions, regional events (like wildfires and flooding), and foreign exchange fluctuations, leading to a tempered total revenue and Adjusted EBITDA outlook for 2024.
• Take-Private Offer in Play: A definitive agreement for a take-private transaction at $9 per share was announced in August 2025, with an investor group acquiring outstanding shares not held by certain significant shareholders. This introduces a material near-term consideration for investors.

The Global Tapestry of Connection: SHCO's Differentiated Platform

Soho House & Co Inc., founded in London in 1995, has evolved into a distinctive global membership platform, connecting a vibrant and diverse community across physical and digital spaces. Unlike traditional hospitality groups, SHCO's core strength lies in its exclusive, community-driven model, which fosters deep member loyalty and provides a resilient, recurring revenue stream. This unique positioning allows the company to blend work, socialization, and creative collaboration within its global portfolio of 46 Soho Houses, 8 Soho Works Clubs, The Ned hotel sites, The LINE and Saguaro hotels, Scorpios Beach Clubs, and its Soho Home retail brand.

SHCO's strategy is anchored in two key pillars: growing and enhancing membership value, and delivering operational excellence to drive profitability and free cash flow. The company's historical journey, marked by strategic expansions into creative hubs globally, has cultivated a powerful brand that strengthens with each new location. This contrasts with traditional hospitality companies that may experience brand dilution as they expand. The value of an "Every House" membership, providing global access, becomes increasingly compelling as SHCO's footprint grows.

In a competitive landscape that includes broader hospitality players like Marriott International, Inc. (MAR) and InterContinental Hotels Group PLC (IHG), and social venue operators such as The ONE Group Hospitality, Inc. (STKS), SHCO carves out a niche through its curated, exclusive community. While MAR and IHG boast extensive global networks and advanced digital booking systems, SHCO's focus on intimate, tailored experiences for creative professionals provides a qualitative edge in member loyalty. SHCO's integrated membership platform, blending work and social elements, differentiates it from STKS's more event-driven approach. Indirect competitors, including online professional networks and remote work platforms, offer accessible digital alternatives, but SHCO's physical spaces and curated community foster deeper engagement.

Technological Underpinnings of Exclusivity and Efficiency

SHCO's operational strategy is increasingly underpinned by technological differentiation designed to enhance both member experience and internal efficiency. The company leverages its proprietary Soho House App, which provides personalized event recommendations based on member data, leading to a 6% increase in event bookings. This data-driven approach allows for a more tailored and engaging member journey. Furthermore, SHCO has replatformed its online bedroom booking system, simplifying the member experience and optimizing reservations.

A significant technological investment is the ongoing implementation of a new, modernized finance Enterprise Resource Planning (ERP) system. This cloud-based system is a strategic initiative to overhaul finance, procurement, reporting, compliance, payments, and staffing functions. The stated goal is to seamlessly connect these back-of-house operations with membership and operational systems, enabling the company to scale more cost-effectively across its presence in over 20 countries. While this ERP transformation is expected to be a "transformation through 2025," it is anticipated to deliver "significant savings" and "better flow through" in profitability beyond 2025, enhancing the company's competitive moat through improved capital efficiency and operational agility. Complementing this, a new best-in-class HR system is being rolled out globally, designed to free up managers' time to focus on members and teams, while also improving labor hour management. These technological advancements are crucial for SHCO to maintain its premium service standards and drive profitability in a competitive environment.

Financial Performance and Operational Momentum

SHCO has demonstrated solid financial performance, particularly in its recurring membership revenues. For the 39 weeks ended September 28, 2025, total revenues reached $983,418 thousand, an increase of 9% from $898,259 thousand in the prior year period. Membership revenues, a cornerstone of the business, grew by 15% to $354,239 thousand for the same period, driven by an increase of approximately 4,300 Adult Paying Members and price increases implemented in January 2025.

Profitability metrics also show positive trends. Adjusted EBITDA for the 39 weeks ended September 28, 2025, surged by 47% to $146,866 thousand, compared to $99,612 thousand in the prior year. This increase was significantly bolstered by $22,899 thousand in COVID-19 business interruption insurance proceeds received in the first quarter of fiscal 2025. House-Level Contribution, a key measure of site-level profitability, increased by 14% to $191,631 thousand, with the House-Level Contribution Margin rising to 27% for the 39 weeks ended September 28, 2025, up from 26% in the previous year. This improvement reflects increased membership and in-house revenues, partially offset by inflationary pressures on operating expenses.

However, the company has faced a "choppy revenue environment" in its in-house and other revenue streams. For the 13 weeks ended September 28, 2025, In-House revenues increased by a modest 5% to $126,088 thousand, while Other revenues grew by 16% to $121,960 thousand, driven by strong performance from Scorpios and Soho Home. The Americas segment experienced a slight decrease in In-House revenues due to regional events like wildfires in Los Angeles and adverse weather in Miami. Operational expenses, including In-House operating expenses and General and Administrative expenses, have seen increases due to new House openings and global expansion, though partially mitigated by cost discipline and operational reorganization initiatives.

Liquidity remains a focus for SHCO. As of September 28, 2025, the company held $142,490 thousand in cash and cash equivalents and had access to a $75 million undrawn revolving credit facility. Net cash provided by operating activities for the 39 weeks ended September 28, 2025, was a robust $98,757 thousand. While cash flow from investing activities showed an outflow of $101,859 thousand due to capital expenditures and investments in joint ventures, the company believes its current liquidity is sufficient to fund its operations, lease obligations, and capital expenditures for the foreseeable future. The company's net debt to adjusted EBITDA improved to 5x as of September 28, 2025, down from 6x at the end of Q3 2023.

Strategic Trajectory and Future Outlook

SHCO's strategic outlook is characterized by a continued focus on membership growth, operational efficiency, and selective expansion. The company has a clear target to exceed 210,000 Soho House members by year-end 2024, with growth primarily driven by the maturation of its 27 Houses opened since 2018. Pricing adjustments, including a high single-digit percentage rise for existing members and a low double-digit increase for new members in January 2025, are expected to further bolster membership revenues.

In response to a challenging development market marked by high interest rates and inflation, SHCO has strategically adjusted its new House opening cadence to two to four per year for the next couple of years. This pivot prioritizes membership and profit growth over rapid physical expansion, with management noting that a slower opening pace would actually enhance EBITDA as new Houses typically incur initial negative impacts during their ramp-up phase. Despite this, a strong pipeline of over 20 signed Houses remains.

The company is also expanding its diversified offerings. Scorpios Beach Clubs, with a record-breaking season in Mykonos and a new location in Bodrum, Turkey (opened June 2024), plans for a third site in Tulum, Mexico, and will introduce bedrooms for the first time. Soho Home, a digital-first retail brand, has tripled its revenues since 2021 and is poised for further growth through an expanded assortment of furniture, outdoor furnishings, and lighting. The ongoing ERP implementation is a critical long-term strategic initiative, expected to deliver significant efficiencies and a "significant tailwind" to profitability beyond 2025.

Risks and Challenges on the Horizon

Despite its strong membership model and strategic initiatives, SHCO faces several pertinent risks. The most immediate is the pending take-private Merger Agreement, announced in August 2025. The consummation of this Merger is subject to various conditions, including shareholder and regulatory approvals, and its delay or failure could negatively impact the company's business relationships, operations, and stock price. Lawsuits related to the Merger could also distract management and incur substantial costs.

Operationally, the company is exposed to macroeconomic uncertainties, including inflationary pressures on food, utilities, labor, and rent, which can impact profitability if not sufficiently offset by pricing adjustments or efficiency gains. Recent events such as wildfires in Los Angeles and flooding at a UK property highlight the vulnerability to catastrophic events and their potential to disrupt operations and impact revenues. Furthermore, the company has identified material weaknesses in its internal control over financial reporting as of September 28, 2025, stemming from a lack of sufficient personnel with GAAP knowledge and ineffective accounting policies and procedures. While the ERP implementation and increased finance team are addressing these, they represent ongoing operational challenges. Foreign exchange and commodity price risks also pose potential headwinds to financial performance.

Conclusion

Soho House & Co. stands as a compelling investment narrative, rooted in its unique global membership platform and a demonstrated ability to cultivate exclusivity and community. The company's consistent growth in recurring membership revenues, coupled with a strategic pivot towards operational excellence through initiatives like the ERP system and a disciplined approach to new House openings, positions it for enhanced profitability and cash flow generation in the long term. While macroeconomic headwinds and the complexities surrounding the take-private offer introduce near-term uncertainties, SHCO's foundational strengths, including its differentiated technological approach to member engagement and back-of-house efficiency, are expected to drive enduring value. The successful integration of its diverse brand portfolio and the continued maturation of its existing Houses will be critical indicators of its ability to translate its unique market position into sustained financial performance.