UP - Earnings call transcript Q2 2022 | Wheels Up Experience Inc.

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Operator

Welcome. My name is Britta, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wheels Up Experience Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise, and after the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. begin may you Ferguson, your conference. Keith

Keith Ferguson

statements of estimates to refer be This results. materially. future The may statements you. well wheelsup.com/investors. a be presentation afternoon considered website forward-looking Investor supporting events. and we with financial quarter our as can today’s of second our copy on actual current earnings differ at as our Today’s presentation our Relations announced These tables, Thank found release its Please on disclaimer. forecast only results slide contains the based and expectations should with

financial refer call During the that, Up’s non-GAAP today’s statement call, And non-GAAP financial measures to other presentation. than as of are we Unless financial non-GAAP of all and be the will outlined non-GAAP guidelines. by with Chairman and release Chief income measures definitions Officer, otherwise revenue. within will noted to turn tables SEC Reconciliations over to appendix measures GAAP to measures found Kenny financial earnings our related Dichter. financial of Executive today’s and Wheels I’d like of

Kenny Dichter

Thank you, you all to us joining Keith, thanks for and today. of

to report pleased fit our see start positive Air quarterly as we call, strong to am we market are an to of path including strong background, record technology our to for three, key prioritize and are three product initiatives; the think of platform acquisition an across One, business topics components a update another our the investors that that today. as adjusted performance; our of progress going important EBITDA. Partner. continue on demand With two, revenue recent today’s on For update and operating I our we great to a

active consumer aviation strategy aggregates growing diligently working on million with around a members poised execute growing $X.X Today, private years clear leader than fragmented enabled revenue from base technology are short deliver and we four We market over strong a highly supply, of private of place and XX,XXX billion for $XXX are demand. connected are to just more to up aviation in build with on-demand ago. we and that our year, a to this

built have well forged strong and that significant commercial deliver brand relationship a Airlines, unique and private in Delta have iconic aviation, with We as to members. value even brand an as partnerships our greater

often While marketplaces, some it’s it’s strong have of area we demand, challenging where generating growing a base an been very for successful.

sales, nearly future further up increasing Prepaid We nearly Partner’s and over year second the a as effect. as is block well compared Air business. surcharges travel, Our flying Live quarter jet million demand contribution XXX% as were strong, testament the of to million, great continued as exceptionally average our revenue over year-over-year, private XX% and quarter Today, second indicator of and success solid, even overall tally the XX% reported up remains made over quarter up that $XXX for fuel clear, Active And our to year-over-year. Flight appetite for up members Legs date. a ago. record a are XX% reflecting to over year-over-year. $XXX pricing were is took from a for

year our be retention to on members more and to Our with core $XX,XXX than core continues member spend continue average. per robust us

at believe We future members our with also us cohorts continue a continue clip. revenue prior healthy all Our of factors these a to strong and spend and long more to newest growth. our than foundation cohorts fly provide spend for time

drive we several of macroeconomic we are strong, continued but levers believe have good was not growth. the environment. We immune, cognizant topline to our the to be While is expect do uncertain completely news we

greater benefit points we normalizes, have price and a broader marketplace. realize wider our set a serve of demand customers from variety at a of the industry As to begin opportunity to

Specifically, we for app, consumers both and and for with opened easy targeted us. with to volume wholesale fly up existing to partners prospective make through marketing mobile have delivered capacity on-demand flyers goal increased strategically our to customers. our available it our is Ultimately,

committed customers, whether wholesale flyers for our they delivering or all are are We of on-demand to members, partners.

the All of coupled That macroeconomic appreciate give initiatives progress despite customers demand we translate in profitability significant from ultimately that our that need these existing the we revenue make must year, geopolitical revenue can growth we also growing and us deliver continued and strong area. with that uncertainty. confidence this to understand said,

technology. and are the The while technology At to for headwinds key supply initiatives, our our focused experience long-term to our profitable further time, on efficiency. provide aviation are build doing will a marketplace goal scale, provide prioritizing and Our that Vinayak investment enabled teams foundation drive and is what will sustainable member is the technology side on private update that an call, growth. of utility aggregate to efforts streamlining we also same will profitability. our strong short-term to our margin goal

As is mentioned Air our to start. earlier, acquisition a off strong Partner

North time our into augmented are We Europe. revenue flying in Air Partner as on relationships America. Air profit. have great platform their customers team doing command also bringing want are to for onto had Partner the fly expectations job supply our seeing we the overall and our important our capacity. a of exceeding both I new demand same fleet several At customers that increasingly

Air Partner We thrilled on have our to team. are

year With in contribution of progress Vinayak the the a hear to expect benefit index adjusted from the to will in of and show about of Air that EBITDA Partner, healthy margins QX, move XXXX. operational a you fuel we full higher and from course positive the surcharge the quarter, over

an to a carbon our We like program June. on this provide take our launched offset update moment to environmental I’d Next, initiatives.

is a to future sustainable Our approach multifaceted.

Our partnership Hertz example. perfect with is a

most aircraft focused the these get our future more we and will also remain network advanced our on demand, initiatives We customers important facilities. earnings details Our reduce the environmental I a to on how electric in the overall forward best-in-class of vehicle impact our in sharing while operations on the calls. tapping market. on into can service, look

of background rigor Before driving with little Vinayak, us us expect been he profitability achieve strong that our Smith. introduce GE, most over Wheels adjusted Todd some roles, discipline. in the caliber a and Global a Todd how provide financial over several is I to joining of sustained recently on tremendous Planning has turn reflection Financial I Analysis. and will a financial want someone has Head from Todd month, for we where this to as color EBITDA held operational attract new Up. of The it can opportunity XXXX. at fact Todd a to of we senior CFO,

loyal their thankful like for I customers put to to and effort their commitment. I entire members thank trust in am to and continuing hardworking always, us. and for tremendous recognize As our team our would also

let Vinayak, to me it provide turn and who more will initiatives. Now, our details over on operating technology

Vinayak Hegde

It’s be you of great to Thank all today. with Kenny. you,

in and base revenue making investments driven strong member we large focus scale. on at a delivering experience emphasis profitability, us puts operational delivering execution, Our impact will a decision as data goal, are have we our help continued the premium an making position on so ensure

early are in second-party our of on me further Let an the am strengthening and of longer June, first-party, slightly FMS. complete. the aircraft update I It our managed which announce third-party the control than all entire noteworthy, quarter, foundation to as under are took anticipated, now it with our steadily all and UP the technology where fleet accomplishments but pleased on GRPs, past Most we we have capabilities platform. is start in

including full adjust supply holistic provides of visibility into us see For have availability and accordingly. the our vacation supply the and aircraft schedules. we first to that support and in training there a is mismatch time pilots in This view upfront Wheels where and and maintenance, Up a schedules history, our demand allows the

same we pilot as example, margins profitability. travel peak these improvements All process XP and improve the to as preventive around highest in on help well and operation with more optimize us demand, can now For applies capacity scheduling to utility, a operational efficient allowing days us days team. have result schedules more maintenance that

on supply technology working we customer changes, Now events and various to operations real-time. anticipated unforeseen circumstances optimization regularly. that to happen schedules we are that This daily adverse manage critical learning last and machine maintenance minute help FMS, in in be travel in Up as our on will weather our to are layer respond operations

our we pricing improvements and before. Through data this experience. ability stress to to customer behavior. in forecast, can’t reduce will using enable influence we technology software architecture, events than demand accurately operations adverse possible, we to ever customer the forecast us have now most predict enable by demands operations always can improve While that address our situations and and operations, our affect as will importantly those better daily effectively instantaneously our more our as can overall and safer this Through smart and efficiently shape on the

visibility can assets, can also a maximize progress well the in we open and the to our now data fashion is supply still a profitability. profitable our and scaling demand, using fulfillment Up maximize work to cost on as and as in schedule. opportunity optimize managing relationship between FMS, do a our As deliver we Increased of solid fine-grained forward and data supplemental and more our a margin. an highlight market a considerable a technology to more beginning from we schedule at windows in to our There place of revenue is connecting our result, will on have our throughout providing look the for this on throughout supply up utility the where of year. utility and wholesale With all platform profitable update it just operations, but foundation I in flight

to providing release our a for pace, deploy customer users of enable features create alerts at us and app, the enabled on customers highlights demand our with customers customers at passenger take mobile expect puts a alike, members faster a to capacity search well improving performance, by that including higher non-members recent in to interactions service-oriented low will experience list, higher we more is advantage and self-service, which service to improve routine The member reducing a Ultimately, these tasks. available driving improves for architecture and members convert app touch capabilities use service directly the fleet rate. has experience, through routes, customer best of balances high and added and benefit as better customer benefits, greatly and the app operations manage directly that specifically to app changes simultaneously and as members our to margins. Turning focus can and experience our develop control. teams new logistics enables self-service much will and our that The book percentage periods our customer itinerary providing

is convenient service and increased and palm customers members strategy empower their mobile and them personalization incredible in to through an hands. offer digitization Our the our and of

building the have the innings in support in early scale. blocks world-class a are app, we building at We marketplace place of to but our

what has continue pilot are We persist. when are retention, can focused headwinds even such factors on shortages are we from well-publicized three to executing we Pilot as availability to that control three. external we industry-wide facing all hiring, and elements, steps address training and taking the stiffer

compelling proposition over continue us best value very year. to talent this the With retain We over industry. pilot so last and e pilot the hired exceeded goals build help hiring in months. to XXX our pilots far a attract the eight have

pathway addition In serve are also career future efforts a organic pilots. partnership of consistent our source we programs to to hiring launching

Delta Flight robust we help partnerships us Over announced which a expect Airlines month, pipeline we ensure with School, last and top of ATP to talent. the

faster. additional bottleneck aircraft. pilots, pilots our training us utility have our best serve availability which active made a and To retention, once newest more to on-boarding in customers significant to pilots That’s This benefits. highlights why hiring we continues into of it our to and a our and XXX hired. get wider success service been we have include concerted takes address pilot will work-life Aircrew total give process, compensation launched expedite the a drive development, for pool this to flight program, time with effort a of iteration on career delays they dispatch be service enter have we the simulator secure availability, to order to While

where We the quality employer place and for life of our enjoy the rewarding focused on We pilots opportunities are to be choice a pilots. long consistently can private of in strive aviation career careers. the improving and

and capabilities our we inventory significantly make have to While pleased progress continue I pilots, hiring improved am technician management. strong to maintenance to report parts due improved on

control at We internal our continue labor maintenance in to to a times and allowing to better service capabilities, lower cost. our maintenance invest us scheduled return

unscheduled We maintenance response on service boost are mobile address over to year, by unit at track XX% airports. our capacity to remote providing time this faster

serve, was we experience asset clear, we be Rob to companies operations a soon. Holdings hiring high the the our the is why EVP pressures and that largest our June, in at anytime of with Cords airports these StandardAero. we do Infrastructure. MRO at Rob is not large critical team and the Operations the parts, as to two That the President significant it’s augmented maintenance capabilities. overall be leadership of continue Given and to of execute expect the will To Rob’s to this and of pilots, subside at Airlines President we and number imperative Fleets a pressures Model of world on Fleet capability. the to a operations level. proactively address In prior formerly leadership of macro

update to I an provide of certificates. want on FAA our consolidation the Next, operating

expect because XXXX. operational this we the overall for scheduling one our efficiency. travel, operating certificate, certificates schedules more unneeded pilots floating significant be group fleet. a flexibility, and diverse When take Multiple our with can predictable consolidation, to we our we in provides we more much of matched limit more better and which efficiency full enables advantage reduces when us operate We will fleet, have under complete complexity increase see

the I on changes our want to recent to Xst. strategy, effective became pricing and product highlight Finally, which June

We hourly plus, pricing number peak drive our to rates They our how return a members maximize days by include periods availability. guaranteed on consumer time future levers behavior have both and call-off our minimum surcharges, products use of flown, today. and cabin

higher implemented that is applied previously it members are the takeaway block most all fleet. drive by bookings the a true by reflecting sophisticated margin is a of purchased. will across were services the the in and experience surcharges for note important more customer smoothing pricing to addition, provide we the of believe June important the post better way. to fuel irrespective Xst programs In a The managing changes We these we demand contribution that cost

proud by for last of outlined I saying, initiatives quarter. very delivering am conclude me we Let our the team

the Our to and entire fleet maintenance Up continued increased enhancements FMS pilot app and on new our hiring.

initiatives extremely of We far I team am so has will year. our milestones the future, given our we our deliver timelines confident continue the to reached set. and this

that focus with We will continued customer continue let on look turn you all. business our to relentless and to improving Todd. me profitability. the to have to a it I progress experience our forward driving sharing With over

Todd Smith

excited weeks Thank the you, Vinayak. I Hello, I but the see since here everyone, it’s been about I significant opportunities future joined, only incredibly am six and for Wheels Up.

operating company Vinayak prioritizing action, members, and disruptive are innovative ultimately our driving we mentioned, Vinayak The our is As on Kenny and have our the building team to outlined. that putting an cost, vision Wheels including the focused Up employees now for and shareholders. that needed into investments entire our delivers initiatives that rigor execute and on our streamlining

on time take which We gives needed sheet flexibility have to conditions gives flexibility, will strategic the opportunities. and macroeconomic execute advantage and which we on It also expect significant balance ultimately us us profitability. the key our weather to deliver of to security cash hand the initiatives,

disciplined However, we that capital as With with to background, numbers. spending turn let it and focused me will be on our the wisely.

mentioned, As very revenue pleased are Starting year-over-year with revenue revenue membership our Kenny quarter. growth, strong the up with with for membership, XX% grew we XX% year-over-year.

XX% active year-over-year, second with of continue the and add We mix business members. core new to higher up with XX,XXX quarter members, ending members a

business highly remaining core revenue purchase prepaid approximately members and for retention blocks. for overall, with members is membership approximately Our XX% visible business largely and to core recurring, at XX% strong rates and and

and more non-members we have our our fly. to As platform eased, supply for connect opened have constraints

who times drive These represent opportunity cap members. an we result, expect to rates profile. margin pay start increasing off-peak a an will in customers users active to than traffic market rather outgrow As active attractive at

We leisure flight business Flight corporate pickup year-over-year. up to travel. with up private the Air business and Leg revenue, over in which Live steady see a Turning Live X% quarter. contributed in jet was continued XX% year-over-year, and XX% growth Legs demand, Partner’s of

Live Flight a level up per pleased of for Leg comparing revenue we records also up on reported XX% this of our year-over-year Up, largely that quarter was are growth which strong very of We are factor and XXXX. second higher Air Flight basis, excluding but with on Partner, a core stage and the for basis, growth a considering quarter, to $XX,XXX reflects a peak class than net gross fuel revenue is length, cabin Wheels versus pricing rather off-peak surcharge, flying. and XX%

Leg flying flight been summer flat due management, driven owner quarter season management Live XX% aircraft to aircraft management Total shorter by third per down the of higher travel sequentially under was usage. has revenue Flight to historically to our stage revenue higher patterns. quarter a for grew due forward, sequentially. mix Switching year-over-year Looking aircraft

Partner $XX Our final from slightly grew security as and $XX.X we category, supply quarter, constraints to Air benefited aircraft Partner’s above Air million, globally. took included higher levels. well the $XX demand than other environment the we strong about advantage chain impacted group In was and also great freight was significantly that million with and revenue charter, sales million of of typical expected which That safety from businesses.

held-for-sale total future sales opportunistic continue of to to expected be aircraft will and from We fluctuate with on the quarter-to-quarter. purchases balance

address and revenue let margins. Now of me cost

addition lower marketing improved better prices. levels as events revenue sales, as of was Air improvement higher on Switching for XXX-basis-point year-over-year sales return margins in-person margin of to expenses continued second to a Air than was the the expected and The as and we and member quarter. basis, fuel well contribution sales OpEx, higher percentage in up adjusted investment primarily well as activities, Partner. were XP Partner, by growth, X.X% member Our and new margins, sequential from by utility driven as asset offset

and expenses offset the administrative development of and year-over-year, percentage in we a of up to-date the cost addition undertaken General with We continue revenue. were revenue technology Air measures Partner. increase than to have percentage of as our investment by more as saving

We coming focused in quarters are cost on controls operating the driving leverage. to improve increased our

for $XX.X expenditures adjusted million million. Air software and quarter, we technology Capitalized our million guidance range. adjusted getting quarter, that Ultimately, expectations exceeded Vinayak technology building highlighted has of our important and for this set in business normal spending positive will a capital us. half capitalized software result, negative our a the to I focused Partner quarter. impact EBITDA. an and on the operating blocks. $XX.X start to was important on recent us sustainable path for demand. for initiatives profitability. majority are which to a almost financial highlight through of is key EBITDA more and the The from $X.X off profit operations. come including the drive As were differentiator efficiency our improvement scheduling The is Capital within will and was are aircraft of our to is shaping our of utility efficient great

On to enacted have realized the our minimums changes surcharges, effective and drive price higher. been included help revenue higher already side, that guarantees higher lower program will fuel pricing,

programs condition. to market We monitor continue to will changing respond to our

side, our and as cost in a see and operation cost are streamline opportunities to the we of we the consolidation certificate On profile expect technology. investments lower to result making a drive

significant we there and two revenue Lastly, continue With profit With ended and has quarter adjusted of to profitability growth we expected EBITDA cash, well debt. Air no of million regards expect between performed with reach synergies driving cash to are future all operating we $XXX platforms. in the thereafter. the equivalents actions, cash long-term Partner these leverage XXXX, and to and believe with

fair sheet our market significantly the books. our believe on the With balance the value current demand, industry value above we on is aircraft carrying of strong

quarter $XXX Partner. cash is to acquisition due Air relative primarily of lower Our the million to first balance the

turn So guidance. let to with our me that, now

revenue be the For for full of in $X.XX now year. year expect we to XXXX, the range billion to billion $X.XX

the We quarter. part quarter in quarter driven revenue asset second approximately third will third sales in grow expected plus expect the lower versus XX% year-over-year, by

macro We future uncertainties impact existing of our that may are the flying cognizant customers. for

inflation Kenny on-demand then case base demand marketing targeted uncertainties. levers upside our outlined, other wholesale scenario provide flying, to and to economic will The and

for contribution reporting, results initiatives sales. manifest internal the Moving will lower to in to in expect of from offset some revenue takes margin, adjusted improvements decline sequential of while these time the our our asset we themselves it largely

to As third margin range. X% a adjusted result, the contribution we be in X.X% will expect quarter

$XX the We third expect of in range negative million million. adjusted quarter EBITDA negative $XX to

charge $XX amortization expect between GAAP of We related in a shares of and compensation range stock-based million and the earn-out and million depreciation $XX several quarter. to expense. $XXX also third Reflected this are estimates, non-cash loss net for report million GAAP including to million $XX

In of related gain million expenses items. The in to expect other and range value $XX to or approximately related items. cash warrants non-cash integration we fair and not of other reflect loss the one-time addition, a does any unusual our

capitalized for expect to That consider XXXX cetera. we $XX includes spending capital spending to purchased capital be et We of more normal approximately for million. what software, million continue $XXX aircraft, approximately

the previously With Textron we we remainder $XX that million of our being Aircraft the the acquire to leased. spent CapEx

CapEx. As financing and rather whole In our thank future to want Vinayak Kenny, me we calls, deliver opportunity than to and members, about purchase excited I for mentioned for the opportunity the Up employees. transaction Wheels team to I and view shareholders the in am giving previous join. our closing, as that we a

Kenny Dichter

have to Todd. you, our team. on you It’s great Thank

to some remarks. closing the back Operator, the, call I to turn Before I provide want

demand expanding With the capability, global disruptive our of ever. and travel apparent the marketplace technology more healthy is for enabled backdrop our potential very than

advantage connect improve and demand that across unique and Our we I to our profitable believe the for ability look sharing take seamlessly Up to years in sustained forward creates Wheels utilization generate ahead. our a some With industry questions. asset growth let’s that progress. supply will

Operator

question first ahead of ready Please Sheila. phone on go you Thank you. lines from when We Kahyaoglu Jefferies. the Sheila Instructions] our [Operator have

Sheila Kahyaoglu

whether demand or active in Kenny are members new terms you users? think so your about remarks Thank prepared Todd. you guys. of how great your watching Hi, what topline, do the the environment, about watching, some much welcome in you had it’s we and signals quarter comments

Kenny Dichter

visibility projected probably our we greatly I know the for business thanks off, I say, and again there. funds up have. XX% for in The best would has plus I the our are deposited to on our flying, block block that of been I’d buyers. I we retention. that First like XXX% secondly, out we is that tool we say reported retention are revenue we say, very that always had blocks firm. reported we want indicator retention have sales. advance question. know

If you to and if that membership someone the look that have at means as month, buy great that growth because are on, that’s we the that the else going a well, indicator they for everything leading next indicator, going they renews, buy it doesn’t mean in block XX.

managers when look about what’s I lot enthusiasm about business a the saying hasn’t and the what of are think fall, out people about So, people obviously, couple which doing out really I from and back the of shown travel, up in there, we I think years. business travel see last

we that platform that the with Partner platform affords demand. and So, the us, -- about good global now I service Air think feel coupled the

Sheila Kahyaoglu

margins cost nicely about half the with the in sequentially, Perfect. the XXXX? how surcharge some how fuel think into we Maybe on do one profitability and more that and side, improved of of the second much

Todd Smith

Todd. Yeah. This is

quantity index had fuel went the But revenue the in of to that cover, during I think, into place very our fuel that gives small us quarter. another in June. only charge most fuel surcharge flat -- charge in really relative quarter. the charge only effect second index will the rate We a effect the

those where fuel of second we you can quarter, first grow in some the to a continue saw that in quarter. practice relative bit So,

the got got Now now, and we place third fuel quarter better about much that in mitigated. have quarter that we we fourth have index feel that

going expect in our of do in forward we lift So level margin some XQ.

the rate is, performance guidance in margin as shared third likely be back sales, we of to terms we I got we a fuel asset that in quarter, we hired the result that well see the the by expect quarter talked that place. what skillful and as index for come in of about think, Partner’s and Air of improvement a as from second will some bit of and offset the outperformance be will some

Sheila Kahyaoglu

so Todd, Thank you, much.

Operator

the Thank Bellisario ahead next question you. We have you of Baird. ready. go are when Michael Please from now

Michael Bellisario

everyone. afternoon, Thanks. Good

context Just saw on give around gave your some a your in of kind days plus draw you XXXX adjusted more today, confidence the business? the sand, in us target, just anything maybe or specific last decision XX your minus EBITDA you line to over why profitability that

Todd Smith

Yeah.

I think think, here weeks we feel joined will in take this really as a started mean, certainly, six about we of with that. time business, last that lot and here. I I I look, really, and spent I good the things in

We membership have great there loyal got a a base, well. really got strong have a we members topline, got market we in very fits product that

did think will I it and go mind relative that second clear both we about lot of what in very a us though, Wheels good out. from profitability. and of quarter there, pass for done we will revenue it kind leave we forward that improved I as are the and translates that team, said, thought being laying and I that employees think the with feel we the about We the that, that loss some came in fact leadership Up levers the generated a of magnitude sat to described from of that first Vinayak down performance to operational the key

individual We timeline surcharge from structural that’s that our really June changes price at path Vinayak are the what share bit XXXX But obviously, also right really ranges gives of operational a these little we to of to give want improvements. the things to focus are helpful. doing, what drive us on these positive feel we have try increasingly if structure are cost Air execute that fuel a leading operational working work but more in not things are ultimately, our date even from some incremental taken to number those, focus in we translating the And operational now are business. in control of to to. felt we our being quicker, one and and effect control, went book, into and knowing we that can and is already, the this little to we Partner on to about that Vinayak, aligned that that an in lot But but going you that are... are that improvements but our that’s we contribution actions and hard coming details

Vinayak Hegde

Definitely. Yeah.

--thanks, op the This Todd. Vinayak here. On is

improvements, got one operational of do better key visibility things the Up so to as into have FMS. we the launching the we have was On operation,

ability five one from see the have past That operating different operation to when demand, fine-grain do that what way. different entire the we because at comes understand supply as we operational match can demand operation, had the the can four perspective even we an like supply, we with higher certificates, a how better we primarily same much with more so had demand, have manner all them days actually seen demand match that first-party gives that Our at that us we is so you margin. that and in known are of at certificates, a though

the So be doing. fine-grain do so at would that is fashion, we thing you a can that much first

the understand when basis, wanted has with to really secure better pilots per maintenance the And the margins. actually the can because say last they into much as can effect when of is time plus second training we happens, schedule we in day better The require fashion terms demand when vacation. have schedules forecasting, the We demand pilots thing to a on visibility in better the coming thing an of manage a cabin I third-party demand they supply is, per take on well. exactly

us really confidence into margin. visibility three So to into The we has to better all supply a to certificates us we them cost will would the main I the in all is operational one efficiencies into the that markets. as certificate earlier a These consolidating going and help thing give of it we the us in one visibility do consolidate are of getting have much plan our say, last terms better been want we to more are things XXXX. of certificate. when better third-party That reductions and gives result and

Michael Bellisario

the follow-up out about marketing there years and would of cost come percentage the to a or just expect And more just sales it the in and is topline one it. really R&D on dollars you revenues? and leveraging down lower Got reductions,

Kenny Dichter

a combination actually both. I think it’s of

as I we key a Certainly of it investment part invest. allow efficiency of take gives us, and effort technology put about contribute and our to operational technology, today the because I should out to want analog that the speak continue improvements want will overall and some to is it to of behind also where optimization we So, and the processes think think we efficiency. manual the the to

at in make need as spend, focused our we of and lot delivers fund that of then growth sure the look taking that make sure by to well a marketing sales think spend G&A it that do sharper a we even area some it’s that a as I and return. to

growth our absolute think, to have you the you areas some of then, leverage So, in couple of I spend. translate will I that to will technology things, be targeted a reduction will sales obviously, see more think general. we certain and and some to in operating And fund used marketing

have of and the right right in because the us kind did focus done that’s for the and haven’t past priorities alignment going the We as forward. we key we that

Michael Bellisario

Thanks for that.

Operator

from The Kessler James. Aaron you. comes Raymond of Thank question next line the of

with proceed question, your may Aaron. You

Aaron Kessler

me, about questions changing? the higher of I how few cetera. any think the are, way I of to from kind a just retention retention are on can pilot et a to couple we can some return the you of not how seeing of that of A mean, times, Also much talk Thank Thanks. the retention, what quantify price you you. maybe that’s rates and quantify, change just rates should kind you in about reaction mentioned prices, elasticity, the Great. assume

Kenny Dichter

here. will swipe first the is I Kenny. This take

in have of price price Just we increases, in got increases did we again and that May. the did November terms we in

So, increases like said price that price increase, the have people reaction it. and the to accepted I the

full I in we June, fuel mentioned our think Todd of the surcharges. effect have

of people of there our the as the it to in customers that’s not programmatic space opaque at and oil the the think is is So in the the our tune part out offering price really end we there, that items, us giving elasticity so as there I Seriously again that’s the and future, an [inaudible] with of day do strong sense number customer the programming. telling most me that accepts membership the us assets in out of relates are that that because are feel the increases path of looking were what the -- that and resonated an they in and to again we of really the will needing what two that price retention, indicator and scarcity about ones at.

Vinayak Hegde

Yeah.

November they that look changes at what we and similar of June, we the from perspective, pricing doing. but looked made competitors in changes in to Just doing with also services we when price at a made when not only on what are we oil, to are add

changed decreased is charges. in Our just right? hourly increased, increase, an some price increase cases, We our many price not months we

to trying friendly match doing, still what we our remaining competitors for competitive customers. are and while being So

thing. So that’s the first

The very, retention retention. is, closely. We second thing of in actually demand and very terms watch

retention stronger. basis. over is are doing As much see we we and said, What our retention retention close continue to at stay we XX% continuing a managing core to is

they information more on to managers, the Our and to sure we so not of account visibility it can watching retention. retention conversation to account data detailed get customer who actually very is and renew, providing so by strong our who are managers is stay with have renew, likely making on the the the likely

actually We perform now. elasticity have and retention seen price membership right not affect

Aaron Kessler

I maybe other the or retention Great. of it, think revenues, QX? And other may how the other but then have you should breakout just you we comment the maybe can for for revenues me missed and revenues on let can also -- QX pilot about

Vinayak Hegde

retention Yeah. the take pilot will I part.

closely. pilot something perspective, retention watch is we very a it So from

the in current As I pilots demand. you environment, are great mean, know,

why That we XXX called We is cognizant it. launch as what are Aircrew is very X.X. of

look XXX, tools the have benefits, you path. to everything that give pilot, technology, respect the lifetime with our them, If at can compensation, career we we

that We sure are well. making we very closely managing and pilots are very watching

cabin make our are managing retention current other sure per and is at understand on we look The we thing at retention really class basis, workforce a a very close basis.

Kenny Dichter

Kenny. thing pilots all in great One This shareholders company. Okay. the of pilot program about our our is is are

Vinayak Hegde

Yeah.

Kenny Dichter

going day, you that And company our one to to are do share. I shareholders. for is get and of public you Thank you our being always every partners the think pilot our a advantages what is

XXX team and Vinayak Aircrew and as Aircrew X.X. So, are developing XXX

If and okay. I said, partners them about time, many you like our think pilot, we our thank

Todd Smith

Yeah.

we I [inaudible] in $XX.X we make So really the of the that in million AP asset we revenue that two then maybe when line up saw quarter revenue. There that growth $XX about primary a some of and the other That’s quarter. that asset that million the both think had, line composition the second meaningful sales of had of of revenue the other is drivers sales there. that [ph] we and revenue the portion

revenue around actually about based or other $XX it of lines million AP about revenue the category on in million talked of we revenue [ph] their is. roughly, $XX So, being what the so goes

that think their we are I that Partner the same same optimistic so contributing continue of may about we Partner the that volatility short forward, two some asset quite although, is because of things the strong quarter, sales going terms in a at with levels not Air with in outperform had far and level if we expect -- earlier, of of one seasonal the saw it make So, the time at Air and level, remarks to profile in also so higher how the they us. don’t prepared we signaled shared you in the think second is continue we we

Aaron Kessler

Thank Great. you.

Operator

Aaron. Barrington you, Prestopino of Research. We now Thank have Gary

question, with may Gary. your You proceed

Kenny Dichter

Gary. Hi,

Gary Prestopino

I Good doesn’t Couple things to again it certificates, Vinayak, is of here, of crews that? what you flight standardize maybe the believe you, give size does afternoon, could these me when everyone. explain you questions like consolidate and it

Vinayak Hegde

who the particular yeah, To easily two that fly and certificate to they put belonging aircraft can on it when aircraft planes. example, consolidate the fly we are in we aircraft. we what Frankly, different certificate have happens a Citation and yes, you Excel of pilot are certificates are we so type if an to certificates need is give but let’s pilots the for them can’t they say, city, a or,

So is that thing. first

globally in operating I in of of also one there them can cannot all gaps, in are of can smoother everything so fashion. schedules, common is the a be be that clear method, is, managed communication in ownership certificate Having two means has managing like there much maximize Second been less because certificates. training procedures, all Right that maintenance they now different certificates, them. scheduling one done

Having there be to at doing through have now for day, we you go are plane certificate that what a The to it will could mechanical imagine other then thing does is, any on failure while the experience a every of one experience, delivering we is and say given right faster best the best allows of for all the that making in us. in certificate has really possible way in customer optimize capacity. case who the them mechanical is sure to the accomplished us

Gary Prestopino

will And certificates these have said Okay. you all XXXX. you consolidated in

Vinayak Hegde

is correct. That

with working the the are to We consolidation. FAA do

Gary Prestopino

less is regulation government check is to… and wanted box hard more the extremely to That’s this kind I another a get, it of or question

Vinayak Hegde

all how return manage -- manage to across the time, give everyone get And manage how it certificates, No. we location, type it We do, us we all to do -- but cleaning, can operating one. we also it it how we do all Yes. helps really does so is do not service. on hard do

agree anyway is do on us and doing position. procedure, a what So exercise improve already agree by us much good for they put it that to and people a that because would in these having by are Essentially the on procedures FAA. FAA one efficiency, approved the better

Delta is, with have well. and then Chairman good So best who all is who the Airline, to on of what consolidations to our we is Dave Operations, certificate from fix similar Delta practices is Holtz, worked have, work that, of the the FAA involved The are as do we at thing we who consolidated. in pricing trying certificates

we people manage things. these from help have We helping actually how us across on all out Delta

Gary Prestopino

that, Okay. positive adjusted And with of couple exiting XXXX is do target your if plan, QX that share of in your you seeing start we us? then that terms a that for that or just want to master EBITDA, when in is some questions, is more or

Todd Smith

[inaudible] can. our is Yeah. goal mean, we there I certainly

rate. intend mean, don’t We to our focus. going be are that’s hard So an to that. could we XXXX, very accelerate it said we try I exit

got the rigor doing the now how operating are goal. right alignment directly is, here last as operating I we and are I I meet focused set we my the are to and and right to to that get we aligned are get in the going, that have closely tied tied -- have think focused maybe we rhythm of working that that of and set narrow in -- on that priorities that think drive so of of are the the mentioned one all work And we are you of absolutely Vinayak to as that And us profitability I kind are none of to week objectives, this. of satisfied with this a level that very profitability ones current to business. do place, priorities earlier, working tied but arrived we in

we very as very, going quickly are that make to that happen So we hard work to accelerate can. and as

Gary Prestopino

share you would what profitability margin, Okay. be adjusted your target And to can achieve contribution that?

Todd Smith

Yeah.

are of we to historical double-digit I we I that’s get back in, think, that levels mean if is which margin. what the targeting. some adjusted contribution operate we

around on number we do that improvement, to ability focus terms of the our of is availability, I things of utility maintenance have know and to it [inaudible] think function in is we you there As that cost pilot of is structure. need combination work

to getting think targeting. that that get to I the back range are something us would we profitability allow in So

Gary Prestopino

very Okay. Thank much. you

Operator

go have ahead Marvin. Thank Fong you. now of Marvin Please when ready BTIG. We you are

Marvin Fong

Great. you Thank my question. for taking

last of I as some and sales one, at more than think, obviously, margin the I believe you to you cited you guided asset First factors partners. stronger performance better contribution and did our a such other quarter that, X.X%, and

X.X a the point to that did also margin basis, wanted just core you target? outperform percent confirm So on contribution

Todd Smith

sequential XQ asset was think driven the about, did when by think that said, you to Yeah, typical in a than you and majority you are -- improvement what that Partner over XQ correct we sales. higher I Air maybe highlight of

things. If think you of couple drove about combination excluding a that operational is really items, of it improvement those we the

we that the the but XP fleet. starting higher through and to -- book. rate going only that as some the our of improvement also favor in and things as of quarter-over-quarter, the is in were see Unfortunately, fuel well impact come So improvements utility that on I member our by in were pricing continued fleet, that XP some saw offset fuel growth, not the pressure

we have the So, quarter. as we pressure but had operating we second hoped did fuel to that in it was improvement, that the as saw on an basis, long not of because

Marvin Fong

or Okay. of obviously before your I where exiting, question about expect cash and get positive Great. Understood. I you And do year mean, answered on you whether balance the my that EBITDA have but of follow-up so but question, the plenty position met had just kind you full to same that you cash that trough part, curious, sheet, to do breakeven.

guess, consumption be next, on If that you half just great? cash and idea give over the a us year an would I your could

Todd Smith

by quarter. Yeah. second feel flow million provide the we really that quarter, cash about the we exit guidance $XXX at just of don’t on trying to had But specific position. We good say,

think want there, we a and us position And decisions security same that what carry In us. that remarks, the set at balance we the invest addition a see there’s and that blocks flexibility we in. judicious sheet. gives financeable to position bit good no with we high our the drive continue. the and sheet we future, high our yeah, debt forward. the assets in we we about very something are profitability the we be the going the strong we are we is on about We to market deliver that think case I cash in that higher And are to in fair that where good is to prepaid than with time ability There just feel rate strategic That regard feel we I any improvement on, in the in. really as along comes expect of that path of flexibility value to to affords have prepared balance score that assets and time but we are feel that little the being the mentioned net

Marvin Fong

great. very Great That’s you much. Okay. color. Thank

Operator

now go Goldman Please when Noah We you. of Poponak ready. Thank you ahead Sachs. are have

Noah Poponak

evening, Good Hi. everyone.

Kenny Dichter

Hello.

Noah Poponak

you quarter to possible of the that understand it’s your to the the XXXX. that’s if discuss mix the or bridge how big positive I open get better bigger ago EBITDA then, am to you hoping particularly buy sequential compared pretty seems third-party a can process are on don’t was still it to is, just it’s EBITDA. supply a how a year in supply positive and And like on with of quantify not I I that Maybe market, assuming to -- period guess, the much to highlight it’s piece the I little know in and surprised, period.

Vinayak Hegde

are third-party the see first the by remaining We being by versus it supply. take fulfilled XX% on, we fulfilled the flights in that little the what first-party as on third-party, first-party and will supply. you and third-party. plus I take see first-part don’t terms In about the puts by third-party. is fulfilled is question part of But of second=party depending XX% day the a by

are We have market ad-hoc and we two kinds of going is third-party. where in buying. One the

rate GRPs We arrangements part between of have guaranteed plans. also

That suppliers have they operational control allows us maintain planes, We third-party with scheduling we of control. where maintain contracts understand. to those while

demand. demand because first-party, the of we demand, we So days better as have of We second-party, based manage third-party the and type a the on mix have much have. of we understanding

a there example, mix of first-party, be It may as to it So demand. higher allows GRPs. if will an more the there peak day be customer more actually also third-party us a fulfill is including but

Kenny Dichter

Vinayak real-time, going and enable our and managing Yeah. assets. they focused the are so they the it’s are Technology on important. space, fragmented, legacy not are think and about set, think, we about on it really when where company I focused people’s in are highly the business you with Also, third-party ownership set, and why competitive other the is

via are unlocking fragment We this technology. on focused live

again last in think first and here this year I month.

lift third-party approach going the suppliers taken is in on of but I to be forward, sheet, again part this a going how will, a on we playing derive, that big big think Then are schedules mix our a the business looking again, balance for. with is all unlock. that something to I conservative think we basis. of at technology have you on are to going that go-forward maintenance where your the getting we its are see and something is that we is something I thesis And connect thirdXparty buyers That’s role. aircraft connection a core think really and about scale if

Vinayak Hegde

thing additional to we providers platform our this already that claims, was use to operators wanted One that many platform. I platform use FMS manage say the over technology Up different our use of XXX and third-party already

we what cross are and we -- fill what the working it’s demand optimization, optimize is are right taking total the call it needed on where we cost now So to a your fleet the the that across actually can so first-party, customer our second efficient take most just way. just but part? demand third-party not in the also fulfill you the we Todd,

Todd Smith

talks highlighted we own box that ways specifically think we in a greater I that much there about seeking if and mean, that, improvement that utility Yeah. improvement more that’s think that look, capacity. us I add probability to you as some drive to fleet our utility are in you operational gives that

rates, third-party a opens today, So we only but then and capacity which that TAM then translates expanding well. up think we higher then for set not -- that marketplace what for number expand us have of us in into serve as more that that I into turn to broader

Noah Poponak

slide Appreciate Okay. of mobile timing app technology are will but core That’s those evolve, just just the highlighted have you all that. highlighted when Maybe initiatives, that today, you what to bullet helpful. on complete? very follow seven, the forever the obviously those points up items on to be

Vinayak Hegde

launch we new of if app. mobile version So the

technology, not frequently. is there’s app two that two in make have enables that service very deployments app now We happened. One, for least years, but things oriented an made to which at us

as add So newer in features. we multiple the us control gives now makes newer we times really That are customer improve quarter deploying us and the experience. and

itinerary the added of the like itinerary, a they if make last change they just month to changes. app, services. to member example, an their to had their new mobile customers had call are features past, to we In control in As

can that on their own. Now they do

alerts, low is day we when available a actually there see available. hot We a have notification a alerts, an is where flight if that flight they empty flight there get customers that demand there that available, so get or or can information a actually day -- or is can is

and as check improving can My they the So of the the the customers so the we matters are can out past experience are faster, the faster, lot. a we speed all constantly, of app that actually pipeline that they about has mobile through can see been app prices speed well, such apps go building faster.

The with schedule. respect technology I the to app one an UP to say other this launched on well. have manage app was Pilots Pilots wanted supply that to thing as use need FMS have their on side. to app we their that

have updated what We as that made before. app have faster it much and was it than we well

do and as app as We the pilots fast can are better for trying to their constantly as they that make well. possible, the efficient such as job

the the app. apps. One is pilot is really is other there consumer the So app, one two

Noah Poponak

expect that’s Okay. to commentary have and the the half the through Last but any color deposit the moment? with know since one, moving Todd, it, flow cash don’t progress how specifically, at activities or needle back on of for I you free we guidance year,

Todd Smith

Yeah.

what a expect maybe reasonably really that’s of typically profile that maybe block saw as again I think and changes, we at in seen we see the that position saw pretty but saw of quite in strong have year lower some quarter we blocks the in the again as the quarter block we a quarter. deals what consistent I will have second fairly we with in to the the years. that We to quarter. end last be don’t in in there we a accept price past. typical, mean, fourth the the seen be third we prior we robust out obviously, coming that’s strong with But second consistent expect quarter,

Noah Poponak

Thanks All much. so right. Okay.

Operator

you. Thank

of from a Credit Tyler line question on have Suisse. We final Seidman the

proceed may You with your question, Tyler.

Tyler Seidman

for guys. Hey, squeezing me Thanks in.

you it it you you up these so Are mostly have back And having the point, opened a is broadly? are launch, Thanks. high me, routes routes at on before issues far? from tech more your or opening are like more mostly key one like up investments volume Can talk about what non-members. needed constraints the pilot this Just end? what sounds to broader the

Kenny Dichter

Yeah. will This is hand to Kenny. and then the it first Vinayak. half I take

great The Sunday operations, you demand to our a is Saturday we done more has opportunity into take our care here Saturday travel, the have, when is fleet. foremost, like Air job more take understand our Wholesale, by way, technology our demand that on of and members. to the we if there. Partner you will. have you putting is not for, a or where we First you get wholesale the by may available a mission there Friday risk

that the are I able per thing fleet. demand technology patterns to explained we year about can demand, demand are have available and well, to opens that really developing members non-member here they think community. Vinayak access more we non-member and it out we up Best our explains to algorithms easily recognizable when become X,XXX to and how are push have that look where be and at the the hours community,

that said Vinayak. with So

Vinayak Hegde

Yeah.

So on one that the platform supply and can we fulfill of can the is Up the we advantages having what on there that. see is have that the to of everything FMS is we demand see

don’t do our a has we we so little mismatch, -- see pricing more we now, gotten wherever sophisticated. So things

pricing on kind the demand on plus, based the a day, bit. and we trying cabin based the to little supply, ship into based So of demand on adjust are

many keep cases, platform, full have have the on capacity. can we we on supply into in we because better much third-party that, see our visibility we have including where after platform, Second, GRPs the lanes the that

we seeing, that, search you specific app certain are the It non-member are is go to connect we building and you on on when based see the So not routes, whether or openings. technology. you will member a are yet

out need only Florida of the to that As flying Florida. an fleet flights out XX Friday Florida, flying and are get of planes see if XX there I to you on example,

to of now for should the out planes and we Right Florida. capacity there demand are we be get are I app before, That’s will building. actually the was of or level up members open the FMS. we fine-tuning not by for So the one on on capacity, understand building whether able plus everything doing cabin were kind actually demand we though not based which but we key

Operator

you. Thank

have further questions We in the no line.

Kenny Dichter

thank for… I everybody you want to

Operator

I’d like to to… back hand

Kenny Dichter

I Appreciate for for to thank wheels everybody Thanks. today. are up. I thank everybody joining want to joining. want you and

Operator

for Thank you does call. today’s joining. you That again. Thank conclude

may You your now disconnect line.

Wheels Up Experience (UP) 12 Aug 222022 Q2 Earnings call transcript