Wheels Up Experience . NYSE:UP today announced financial results for the fourth quarter, which ended December , .
I am pleased to report another quarter of record revenue, strong membership growth and retention, along with the best quarter in our history for prepaid block sales, which grew more than % to $ million in the fourth quarter. We have more members that are increasingly making long-term commitments to Wheels Up, giving us clear revenue visibility for the year ahead and the confidence to invest in our growth while absorbing short-term margin pressures, said Kenny Dichter, Wheels Up Chairman & Chief Executive Officer. Additionally, we have several key initiatives underway to improve our profitability as we aggressively expand our global supply. As always, I am grateful to our employees for their dedication and to our members and customers for their loyalty and trust.
We are now working to increase our capacity to serve the strong demand we are seeing through pilot hiring, enhancing our maintenance capabilities, and adding to our fleet composition, said Eric Jacobs, Wheels Up Chief Financial Officer. The rollout of our technology initiatives will streamline our operations and add capacity through increased utilization. That, combined with rate increases and cost saving measures, should drive strong margin improvements starting in the second half of the year.
Announced the intent to acquire Air Partner PLC LSE: AIR to extend the Wheels Up platform into Europe and beyond. Closed the acquisition of Alante Air Charter which controls light jets, where demand is particularly strong.
Launched the first version of its global scheduling system, which enables Wheels Up to manage schedules across all of its operating certificates. This system is an important building block that provides a fleet-wide view of available aircraft, with significant benefits to come following the conversion of its entire controlled fleet to UP FMS by the end of April and its ongoing efforts to consolidate its First Party P fleet onto a single operating certificate.
Enhanced the Wheels Up Mobile App leveraging a service-oriented architecture, with an expected launch in April. The new platform will enable improved functionality, greater scalability and a much faster pace of innovation to launch new features.
In thousands, except percentages, Active Users, Live Flight Legs and Flight
revenue per Live Flight Leg
For information regarding Wheels Up s use and definition of this measure see Definitions of Key Operating Metrics and Non-GAAP Financial Measures and Reconciliations of Non-GAAP Financial Measures sections herein.
Active Members grew % year-over-year to , driven by strong new member additions and existing membership retention, as well as continued success converting legacy jet card holders into Wheels Up members.
Live Flight Legs increased by % year-over-year to , with strong flight demand across all cabin classes driven by the growth in Active Members and the impact of COVID- on results.
Flight revenue per Live Flight Leg increased % year-over-year to $, as a result of a higher mix of larger cabin flying and partially offset by a seasonal decrease in average flight stage length.
Revenue increased % year-over-year driven by strong flight demand and the impact of COVID- on results.
Net loss increased by $. million due to several factors, including the impact of the Company benefiting from the utilization of $. million of CARES Act grant funding in , a decrease in Adjusted Contribution Margin caused by supply constraints and increased operating costs, as well as an increase in equity-based compensation expense, including a broad-based equity grant to the Wheels Up employee pilots.
Adjusted EBITDA of $. million, decreased $. million year-over-year, due primarily to lower Adjusted Contribution Margin.
A conference call with management will be held today at : am ET. To access a live webcast of the conference call and supporting presentation materials, please click on the Wheels Up investor site .wheelsupminvestors. This earnings press release and any supporting materials will be available on the Company s investor relations website. We also provide announcements regarding the Company s financial performance, including U.S. Securities and Exchange Commission the SEC filings, investor events, press and earnings releases, and blogs, on the investor relations website.
Wheels Up is the leading provider of on demand private aviation in the United States and one of the largest private aviation companies in the world. Powered by a growing marketplace of more than , safety-vetted and verified aircraft, Wheels Up is the only company in the industry to offer a total private aviation solution that includes a relentless focus on safety and service, with flexibility across all types of aircraft, membership programs, corporate solutions, aircraft management, whole aircraft sales and commercial travel benefits through a strategic partnership with Delta Air Lines.
The Wheels Up App enables members and customers to search, book and fly. Wheels Up Connect, Core, and Business memberships provide enhancements such as flight sharing, empty-leg Hot Flights, Shuttle Flights, Shared Flights, signature Wheels Up Down events and exclusive member benefits from preeminent lifestyle brands. Wheels Up s ongoing Wheels Up Cares program aligns with philanthropic organizations and initiatives that affect and matter to the Company and its customers, members, stakeholders, families and friends. The Wheels Up Cares fleet comprises five custom-painted Beechcraft King Air i aircraft, with each plane serving as a flying symbol for a specific social cause.
This press release contains certain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, but are not limited to, statements regarding Wheels Up s expectations, hopes, beliefs, intentions or strategies regarding the future including, without limitation, statements regarding: i the size, demands and growth potential of the markets for Wheels Up s products and services and Wheels Up s ability to serve those markets, ii the degree of market acceptance and adoption of Wheels Up s products and services, iii Wheels Up s ability to develop innovative products and services and compete with other companies engaged in the private aviation industry and iv Wheels Up s ability to attract and retain customers. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipate, believe, continue, could, estimate, expect, intend, may, might, plan, possible, potential, predict, project, should, strive, would and similar expressions may identify forward-looking statements, but the absence of these words does not mean that statement is not forward-looking. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside Wheels Up s control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. Additional factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements can be found in the registration statement on Form S- filed with the SEC by Wheels Up on August , , and other documents filed by Wheels Up from time to time with the SEC. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, and Wheels Up undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, changes in expectations, future events or otherwise. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. We do not give any assurance that Wheels Up will achieve its expectations.
This press release includes certain non-GAAP financial measures such as Adjusted EBITDA, Adjusted Contribution, and Adjusted Contribution Margin. These non-GAAP financial measures are an addition, and not a substitute for or superior to, measures of financial performance prepared in accordance with generally accepted accounting principles in the United States of America GAAP and should not be considered as an alternative to net income loss, operating income loss or any other performance measures derived in accordance with GAAP. Reconciliations of non-GAAP financial measures to their most directly comparable GAAP counterparts are included in the Reconciliations of Non-GAAP Financial Measures section herein to this earnings press release. Wheels Up believes that these non-GAAP financial measures of financial results provide useful supplemental information to investors about Wheels Up. However, there are a number of limitations related to the use of these non-GAAP financial measures and their nearest GAAP equivalents, including that they exclude significant expenses that are required by GAAP to be recorded in Wheels Up s financial measures. In addition, other companies may calculate non-GAAP financial measures differently, or may use other measures to calculate their financial performance, and therefore, Wheels Up s non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies. Additionally, to the extent that forward-looking non-GAAP financial measures are provided, they are presented on a non-GAAP basis without reconciliations of such forward-looking non-GAAP financial measures due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations.
For more information on these non-GAAP financial measures, see the sections titled Definitions of Key Operating Metrics and Non-GAAP Financial Measures and Reconciliations of Non-GAAP Financial Measures included at the end of this earnings press release.
Class A common stock, $. par value; ,,, authorized; ,, and
,, shares issued and outstanding as of December , and December ,
, respectively
Adjustments to reconcile net loss to net cash provided by operating activities:
Transaction costs in connection with the Business Combination and PIPE Investment
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Non-cash consideration issued for business acquisition of Delta Private Jets LLC
Non-cash consideration issued for business acquisition of Mountain Aviation, LLC
We report certain key financial measures that are not required by, or presented in accordance with, GAAP. These non-GAAP financial measures are an addition, and not a substitute for or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any performance measures derived in accordance with GAAP. We believe that these non-GAAP financial measures of financial results provide useful supplemental information to investors, about Wheels Up. However, there are a number of limitations related to the use of these non-GAAP financial measures and their nearest GAAP equivalents, including that they exclude significant expenses that are required by GAAP to be recorded in Wheels Up s financial measures. In addition, other companies may calculate non-GAAP financial measures differently, or may use other measures to calculate their financial performance, and therefore, our non-GAAP financial measures may not be directly comparable to similarly titled measures of other companies.
Active Members. We define Active Members as the number of Connect, Core, and Business membership accounts that generated membership revenue in a given period and are active as of the end of the reporting period. We use Active Members to assess the adoption of our premium offerings which is a key factor in our penetration of the market in which we operate and a key driver of membership and flight revenue.
Active Users. We define Active Users as Active Members and legacy WUPJ jet card holders as of the reporting date plus unique non-member consumers who completed a revenue generating flight at least once in the given quarter and excludes wholesale flight activity. While a unique consumer can complete multiple revenue generating flights on our platform in a given period, that unique user is counted as only one Active User. We use Active Users to assess the adoption of our platform and frequency of transactions, which are key factors in our penetration of the market in which we operate and our growth in revenue.
Live Flight Legs. We define Live Flight Legs as the number of completed one-way revenue generating flight legs in a given period. The metric excludes empty repositioning legs and owner legs related to aircraft under management. We believe Live Flight Legs are a useful metric to measure the scale and usage of our platform, and our growth in flight revenue.
Adjusted Contribution and Adjusted Contribution Margin. We calculate Adjusted Contribution as gross profit loss excluding depreciation and amortization and adjusted further for i equity-based compensation included in cost of revenue, ii acquisition and integration expense included in cost of revenue and iii other items included in cost of revenue that are not indicative of our ongoing operating performance, including COVID- response initiatives for . Adjusted Contribution Margin is calculated by dividing Adjusted Contribution by total revenue.
We include Adjusted Contribution and Adjusted Contribution Margin as supplemental measures for assessing operating performance. Adjusted Contribution and Adjusted Contribution Margin are used to understand our ability to achieve profitability over time through scale and leveraging costs. In addition, Adjusted Contribution and Adjusted Contribution Margin provides useful information for historical period-to-period comparisons of our business and to identify trends. Prior to issuing a broad-based equity grant for our pilots during the third quarter of , equity-based compensation expense included in cost of revenue for prior periods was not significant.
Adjusted EBITDA. We calculate Adjusted EBITDA as net income loss adjusted for i interest income expense, ii income tax expense, iii depreciation and amortization, iv equity-based compensation expense, v acquisition and integration related expenses, vi public company readiness related expenses, vii change in fair value of warrant liability, viii losses on the extinguishment of debt and ix other items not indicative of our ongoing operating performance, including the CARES Act grant and COVID- response initiatives for .
We include Adjusted EBITDA because it is a supplemental measure used by our management team for assessing operating performance. Adjusted EBITDA is used in conjunction with bonus program target achievement determinations, strategic internal planning, annual budgeting, allocating resources and making operating decisions. In addition, Adjusted EBITDA provides useful information for historical period-to-period comparisons of our business, as it removes the effect of certain non-cash expenses and variable amounts.
The following table reconciles Adjusted Contribution to gross profit loss, which is the most directly comparable GAAP measure in thousands, except percentages:
The following table reconciles Adjusted EBITDA to net loss, which is the most directly comparable GAAP measure in thousands:
The following tables reconcile Adjusted EBITDA to net loss, including the impact of reconciled items on individual income statement expense classifications in thousands:
