Quarterly Report for Quarter Ending March 30, 2025 (Form 10-Q)

Soho House & Co Inc. is a global membership platform of physical and digital spaces that connects a vibrant, diverse group of members from across the world. Our members engage with us through our global portfolio of 45 Soho Houses, 8 Soho Works Clubs, The Ned hotel sites, The LINE and Saguaro hotels, Scorpios Beach Clubs, Soho Home and our digital channels.

The consolidated entity presented is referred to herein as "SHCO", "we", "us", "our", or the "Company", as the context requires and unless otherwise noted.

correcting the misstatements. These prior period adjustments identified therein have been reflected in the comparative periods in these unaudited condensed consolidated financial statements.

Going Concern

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that we will continue in operation for at least a period of 12 months after the date these financial statements are issued, and contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

We have experienced net losses and significant cash outflows over the past years as we develop our Houses. During the 13 weeks ended March 30, 2025, however, the Company reported a consolidated net income of $8million. During the 13 weeks ended March 30, 2025, the Company had net cash provided by operations of $23million. As of March 30, 2025, the Company had an accumulated deficit balance of $1,531million, cash and cash equivalents of $150million, and a restricted cash balance of $5million.

In assessing the going concern basis of preparation of the unaudited condensed consolidated financial statements for the 13 weeks ended March 30, 2025, we have taken into consideration detailed cash flow forecasts for the Company, the Company's forecast compliance with bank covenants, and the timing of debt commitments within 12 months of the approval of these financial statements, and the continued availability of committed and accessible working capital to the Company.

We have considered current global economic and political uncertainties, specifically including inflationary pressures on consumables purchased and wages, and the Company has factored these in when it undertook an assessment of the cash flow forecasts covering a period of at least 12months from the date these financial statements are issued. Cash flow forecasts have been prepared based on a range of scenarios including, but not limited to, no further debt or equity funding, repayment of existing short-term debt, macro-economic dynamics, cost reductions, both limited and extensive, and a combination of these different scenarios.

We believe that the completed working capital events, our projected cash flows and the actions available to management to further control expenditure (particularly in respect of timing of capital works and labor costs), as necessary, provide the Company with sufficient working capital (including cash and cash equivalents) to mitigate the impact of inflationary pressures and consumer confidences, subject to the following key factors:

Furthermore, the Company has access to an undrawn revolving credit facility of £75 million ($97 million), refer to Note 9, Debt, for additional information.

This, together with the Company's wider sufficient financial resources, an established business model, access to capital and the measures that have been put in place to control costs, mean that we believe that the Company is able to continue in operational existence, meet its liabilities as they fall due, operate within its existing facilities and meet all of its covenant requirements for a period of at least 12 months from the date these financial statements are issued.

Based on the above, the consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, we continue to adopt the going concern basis in preparing the unaudited condensed consolidated financial statements for the 13 weeks ended March 30, 2025.

Comprehensive Income / (Loss)

The entire balance of accumulated other comprehensive income / loss, net of income taxes, is related to the cumulative translation adjustment in each of the periods presented. The changes in the balance of accumulated other comprehensive income / loss, net of income tax, are attributable solely to the net change in the cumulative translation adjustment in each of the periods presented.

Impairment of Other Long-Lived Assets

The primary assumptions, which require significant levels of judgment, that affect the undiscounted cash flows determination are management's estimate of future revenues, operating margins, economic conditions and changes in the operating environment. The forecasts used in the impairment assessments was developed by management based on projected revenues derived largely from forecasted member attendance. Management also makes estimates of the expected costs and the expected operating lease costs. Changes in these assumptions could have a significant impact on the recoverability of the assets and may result in additional impairment charges.

Changes in the membership, operating margins and economic growth and the contracted operating rental costs beyond what has already been assumed in the assessments could cause management to revise the forecast and assumptions. Unfavorable revisions to these assumptions or estimates could possibly result in further impairment of some or all of the assets.

The Company recognized $2million of impairment losses on long-lived assets, comprised of $2million in respect of Operating lease assets during the 13 weeks ended March 30, 2025. In the 13 weeks ended March 30, 2025, the Company identified a triggering impairment event in their legacy Chicken Shop Soho Restaurant sites in the UK and performed an impairment analysis on these sites. The Company has been working on

The Company determined that it is the primary beneficiary of the following material variable interest entities ("VIEs"):

Ned-Soho House, LLP
The Ned-Soho House, LLP joint venture maintains a management agreement to operate The Ned hotel in London, which is owned by unconsolidated related parties to the Company (Refer to Note 16, Related Party Transactions for further information). Management fees are recognized in other revenues in the consolidated statements of operations. The Company has a greater economic interest in Ned-Soho House, LLP as compared to its related party venture partner and therefore the Company is determined to be the primary beneficiary.

Soho Works Limited
The Soho Works Limited ("SWL") joint venture develops and operates Soho-branded, membership-based co-working spaces, with foursitescurrently in operation in the UK.The joint venture agreement relates to the UK only. The joint venture was formed on September 29, 2017, when the Company granted two unrelated individuals an option to subscribe for 30% of the issued shares of SWL. The option has not yet been exercised and, consequently, the Company has a 100% economic interest in SWL. Upon exercise of the option, the Company would have a 70% economic interest in SWL. The options carry voting rights such that the Company and other joint venture partners each hold 50% of the voting rights in respect of shareholder resolutions and certain reserved matters as defined in the joint venture agreement. The Company is determined to be the primary beneficiary because it has the power to direct all significant activities of the joint venture.

The following table summarizes the carrying amounts and classification of the consolidated VIEs' assets and liabilities included in the consolidated balance sheets. The obligations of the consolidated VIEs are non-recourse to the Company, and the assets of the VIEs can be used only to settle those obligations.

The Company maintains a portfolio of equity method investments owned through non-controlling interests in investments with one or more partners. There have been no changes in the Company's equity method investment ownership interests in existing entities and nonew equity method investments since December 29, 2024.

Under applicable guidance for VIEs, the Company determined that its investments in the following entities are VIEs:

Toronto Joint Venture

On March 28, 2012, the Company and two unrelated investors ("Toronto Partners") formed Soho House Toronto to own and operate a House in Toronto, Canada. The Company is responsible for managing the development and operations of the property with key operating decisions requiring joint approval with the Toronto Partners.

56-60 Redchurch Street, London Joint Venture

On July 6, 2015, the Company and a related party investor ("Raycliff Partner") formed Raycliff Red LLP ("Club Row Rooms") to develop and operate a hotel at 58-60 Redchurch Street intended to provide additional members' accommodation to the nearby Shoreditch House in London. This was later extended to include 56 Redchurch Street under the same terms. The Company is responsible for managing the operations of the property and the Raycliff Partner is responsible for managing the building.

The Company concluded that it is not the primary beneficiary of the Soho House Toronto or 56-60 Redchurch Street, London VIEs in any of the periods presented, as its joint venture partners have the power to participate in making decisions related to the majority of significant activities of each investee. Accordingly, the Company concluded that application of the equity method of accounting is appropriate for these investees.

Summarized Financial Information

The Company has entered into various lease agreements for its Houses, hotels, restaurants, spas and other properties across The Americas, Europe, and Asia, which includes 48equipment leases. The Company's material leases have reasonably assured lease terms ranging from 1 yearto 30 yearsfor operating leases and 50 yearsfor finance leases. Certain operating leases provide the Company with multiplerenewal options that generally range from 5years to 10years, with rent payments on renewal based on a predetermined annual increase or market rates at the time of exercise of the renewal. The Company has 3materialfinance leases with 25yearsrenewal options, with rent payments on renewal based on upward changes in inflation rates. As of March 30, 2025, the Company recognized right-of-use assets and lease liabilities for 172operating leases and 3material finance leases. When recognizing right-of-use assets and lease liabilities, the Company includes certain renewal options where the Company is reasonably assured to exercise the renewal option.

In the 13 weeks ended March 30, 2025, the Company identified a triggering impairment event in their legacy Chicken Shop Soho Restaurant sites in the UK and performed an impairment analysis on these sites. The Company has been working on re-assigning or terminating these leases as the sites are no longer operational. However, the Company has been unable to do so to date which is the primary reason for the asset impairment. As a result of this analysis, a $2million non-cash impairment charge was recorded for the Operating lease assets related to UK Soho Restaurant sites. No impairment loss was recorded for the 13 weeks ended March 31, 2024.

Certain lease agreements include variable lease payments that, in the future, will vary based on changes in the local inflation rates, market rate rents, or business revenues of the leased premises.

Straight-line rent expense recognized as part of In-House operating expenses for operating leases was $40million and $38million for the 13 weeks ended March 30, 2025 and March 31, 2024, respectively. Sublease income is netted against in-House operating expenses for operating leases of $2million and $2million for the 13 weeks ended March 30, 2025 and March 31, 2024, respectively.

For the 13 weeks ended March 30, 2025 and March 31, 2024, the Company recognized amortization expense related to the right-of-use asset for finance leases of less than $1million and less than $1million, respectively, and interest expense related to finance leases of $1million and $1million, respectively. The Company recognized $1million and less than $1million of variable lease payments for finance leases for the 13 weeks ended March 30, 2025 and March 31, 2024.

The following information represents supplemental disclosure for the statement of cash flows related to operating and finance leases:

The following summarizes additional information related to operating and finance leases:

The following summarizes the Company's estimated future undiscounted lease payments, net of lease incentives, for current leases signed but not commenced, including properties where the SHD team is acting as the construction manager as of March 30, 2025:

Disaggregated revenue disclosures for the 13 weeks ended March 30, 2025 and March 31, 2024 are included in Note 15, Segments. Revenue from membership fees, legacy one-time registration fees, House Introduction Credits, design & build-out contracts and exclusivity & incentive fee contracts are the primary arrangements for which revenue is recognized over time.

All consideration from contracts with customers is included in the amounts presented above.

Contract receivables consist solely of Accounts receivable, which is comprised of amounts due from customers and partners including amounts owed from sites operated under management contracts, amounts billed under design & build-out contracts and amounts due from retail wholesale partners.

Contract assets consist of accrued unbilled income related to design & build-out contracts and are recognized in prepaid expenses and other assets on the unaudited condensed consolidated balance sheets.

Contract liabilities include deferred membership revenue, hotel deposits and gift vouchers (which are presented in accrued liabilities on the unaudited condensed consolidated balance sheets). Revenue recognized that was included in the contract liabilities balance as of the beginning of the period was $34million and $28million during the 13 weeks ended March 30, 2025 and March 31, 2024, respectively.

Inventories consist of raw materials, service stock and supplies (primarily food and beverage) and finished goods (primarily for sale in our Retail business) which are externally sourced. Raw materials and service stock and supplies totaled $16million and $23million as of March 30, 2025 and December 29, 2024, respectively. Finished goods totaled $39million and $31million as of March 30, 2025 and December 29, 2024, respectively.

The Company recognized accrued revenue relating to transactions with related parties amounting to $3million and $1million recorded within "Prepaid expenses and other current assets" in the unaudited condensed consolidated balance sheets as of March 30, 2025 and December 29, 2024. Refer to Note 16, Related Party Transactions for further information.

The table below presents the components of prepaid expenses and other current assets.

The weighted-average interest rate on fixed rate borrowings was 8% as of March 30, 2025 and 8% as of December 29, 2024. There were nooutstanding floating rate borrowings as of March 30, 2025 or December 29, 2024.

The descriptions below show the financial instrument amounts in the currency of denomination with USD equivalent in parentheses, where applicable, translated using the exchange rates in effect at the time of the respective transaction.

Debt: Senior Secured Notes

On March 31, 2021, Soho House Bond Limited issued senior secured notes pursuant to a Notes Purchase Agreement, which were subscribed to by certain funds managed, sponsored or advised by Goldman Sachs & Co. LLC or its affiliates, in aggregate amounts equal to $295million, €62million ($73million) and £53million ($73million) (the "Initial Notes"). The Notes Purchase Agreement included an option to issue, and a commitment on the part of the purchasers to subscribe for an aggregate amount of up to $100million which were issued for the full amount on March 9, 2022 (the "Additional Notes" and, together with the Initial Notes, the "Senior Secured Notes"). The Senior Secured Notes mature on March 31, 2027and bear

The other loans consist of the following:

The following table presents future principal payments for the Company's debt and property mortgage loans that are described in the preceding paragraphs as of March 30, 2025:

Recurring and Non-recurring Fair Value Measurements

There were noassets or liabilities measured at fair value on a recurring or non-recurring basis as of March 30, 2025 or December 29, 2024.

Fair Value of Financial Instruments

The Company believes the carrying values of its financial instruments related to current assets and liabilities approximate fair value due to short-term maturities.

The Company has estimated the fair value of the Senior Secured Notes and the property mortgage loans as of March 30, 2025 and December 29, 2024 using a discounted cash flow analysis. The fair value of the other non-current debt is estimated as of March 30, 2025 and December 29, 2024 using a discounted cash flow analysis, except for the Dean Street Loan and the Copenhagen Loan where fair value is estimated to be equal to the current carrying value of each instrument as of March 30, 2025 based on a comparison of each instrument's contractual terms to current market terms. The Company does not believe that the use of different market inputs would have resulted in a materially different fair value of debt as of March 30, 2025 and December 29, 2024.

The carrying values of the Company's other non-current liabilities and non-current assets approximate their fair values.

Equity and incentive plans

The Company operates two equity and incentive plans for the benefit of its employees and directors. In August 2020, the Company established the 2020 Equity and Incentive Plan (the "2020 Plan") under which SHHL Share Appreciation Rights ("SARs") and Growth Shares to certain employees.

In July 2021, the Company established its 2021 Equity and Incentive Plan (the "2021 Plan"). The 2021 Plan allows for grants of non-qualified stock options, SARs, Restricted Stock Units ("RSUs") and Performance Stock Units ("PSUs"). The PSUs generally vest (i) upon the completion of a minimum service period and (ii) the Company's achievement of certain performance goals established at grant. There were 12,107,333shares initially available for all awards under the 2021 Plan and the shares available is permitted to increase annually on the first day of each calendar year, beginning with the calendar year ended December 31, 2022, subject to approval by the board of directors (the "board"). As of March 30, 2025, there were 3,033,590shares available for future awards. The Company granted 127,575new RSUs and zeronew PSUs under the 2021 Plan during the 13 weeks ended March 30, 2025.

Modifications of awards made under the plans

In March 2024, the Company modified the exercise price for certain outstanding SARs to be $6.05per share. As a result, the Company accounted for the modification as a Type I modification, resulting in $0.2million of incremental fair value, which was recorded immediately as the awards were fully vested. The assumptions used in valuing SARs modified can be seen in the second table below.

Awards outstanding under the plan

As of March 30, 2025 and December 29, 2024, there were 1,159,461and 1,238,630RSUs outstanding under the 2021 Plan, respectively. As of March 30, 2025 and December 29, 2024, there were 5,691,974and 5,839,704SARs outstanding under the 2020 Plan and 2021 Plan, respectively. As of March 30, 2025 and December 29, 2024, there were zeroand 600,749PSUs outstanding under the 2021 Plan, respectively. As of March 30, 2025 and December 29, 2024, there were zerorestricted stock awards outstanding under the 2020 Plan, respectively.

As of March 30, 2025, total compensation expense not yet recognized related to the RSUs issued under the 2021 Plan is approximately $4million, which is expected to be recognized over a weighted-average period of 0.90years.

As of March 30, 2025, there were no unvested SARs issued under the 2020 Plan and 2021 plans.

Holders of Class A common stock and Class B common stock are entitled to receive dividends out of legally available funds on a pari passu basis. Holders of Class A common stock are entitled to one voteper share, while holders of Class B common stock are entitled to 10 votesper share. Each holder of Class B common stock has the right to convert its shares of Class B common stock into shares of Class A common stock, at any time, on a one-for-one basis. Additionally, shares of Class B common stock will automatically convert into shares of Class A common stock, on a one-for-one basis, upon transfer to any non-permitted holder of Class B common stock. Holders of Class A and Class B common stock are entitled to liquidation distributions on a pro rata basis, subject to prior satisfaction of all outstanding debt and liabilities and the payment of liquidation preferences, if any.

Share Repurchases

On February 9, 2024, the Company's board and a relevant sub-committee authorized and approved a new stock repurchase program for up to $50million of the currently outstanding shares of the Company's Class A common stock.

Under the stock repurchase program, the Company was authorized to repurchase from time-to-time shares of its outstanding Class A common stock on the open market or in privately negotiated transactions in the United States. The timing and amount of stock repurchases depended on a variety of factors, including market conditions as well as corporate and regulatory considerations. The stock repurchase program could have been suspended, modified or discontinued at any time, in accordance with relevant and applicable regulatory requirements, and the Company has had no obligation to repurchase any amount of its common stock under the program. The Company intended to make all repurchases in accordance with applicable federal securities laws, including Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934 (the "Exchange Act"), as amended. Under the program, the repurchased shares were returned to the status of authorized, but unissued shares of common stock held in treasury at average cost.

There were norepurchases during the 13 weeks ending March 30, 2025.

Earnings Per Share

The Company computes earnings per share using the two-class method. As the liquidation and dividend rights are identical, the undistributed earnings or losses are allocated on a proportionate basis to each class of common stock, and the resulting basic and diluted loss per share attributable to common stockholders are therefore the same for Class A and Class B common stock.

Litigation Matters

The Company is not a party to any litigation other than litigation in the ordinary course of business. The Company's management and legal counsel do not expect that the ultimate outcome of any of its currently ongoing legal proceedings, individually or collectively, will have a material adverse effect on the Company's unaudited condensed consolidated financial statements.

Business Interruption and Property Insurance

The Company maintains insurance policies to cover business interruption with terms that management believes to be adequate and appropriate. These policies may be subject to applicable deductible or retention amounts, coverage limitations and exclusions and may not be sufficient to cover all of the losses incurred.

In the fourth quarter of fiscal 2024, one of our UK properties suffered damages due to flooding which caused significant damage to certain structures and facilities within the site. The Company is still evaluating the complete scope of property damage and business interruption loss. As of December 29, 2024, the Company reported an estimate of the book value of the property and equipment written off and remediation costs of $6million. As of March 30, 2025the Company incurred further costs of $1million. The Company has recorded a corresponding insurance receivable, included in prepaid expenses and other current assets on the consolidated balance sheets as of March 30, 2025 and December 29, 2024. As of March 30, 2025and December 29, 2024 the Company received cash proceeds of $2million and $1million, respectively. We believe our insurance coverage should be sufficient to cover substantially all of the property damage and the near-term loss of business in excess of our insurance deductibles; therefore, we have not recorded any loss on the consolidated statements of operations for the 13 weeks ended March 30, 2025.

As a result of the flood damage, the Company recorded business interruption insurance proceeds totaling less than $1million related to the reimbursement of lost profits as a result of the closure. This amount is recorded as business interruption income in the In-House operating expenses in the unaudited condensed consolidated statement of operations for the 13 weeks ended March 30, 2025.

COVID-19 Business Interruption Insurance Proceeds

On February 19, 2025, the Company received $23million (£18million) of business interruption insurance proceeds, net of fees, from one of its insurers. The proceeds relate to the impacts of general business interruption (including lost revenues and additional costs incurred) in the United Kingdom due to the COVID-19 pandemic. The recovery is presented in "Business interruption proceeds, net" within the unaudited condensed consolidated statement of operations (would generally be presented in line-item 'Other, net' however separately presented due to magnitude of this amount during the 13 weeks ended March 30, 2025) and is included in net cash provided by operating activities in the unaudited condensed

consolidated statement of cash flows for the 13 weeks ended March 30, 2025. This payment represents a full and final settlement of all claims the Company has or may have related to business interruption losses and associated costs and expenses arising from the COVID-19 pandemic in the UK.

Lease Commitments

See Note 5 - Leases for information on estimated future undiscounted lease payments for current leases signed but not commenced as of March 30, 2025.

For the 13 weeks ended March 30, 2025, there have been no material changes in the Company's estimates or provisions for income taxes recorded in the unaudited condensed consolidated balance sheet.

The effective tax rate for the 13 weeks ended March 30, 2025 was 47.3%, compared to an effective tax rate of 7.20%for the 13 weeks ended March 31, 2024. The effective tax rate for the 13 weeks ended March 30, 2025 differs from the US statutory rate of 21% primarily due to the business interruption proceeds received in the 13 weeks ended March 30, 2025 taxed discretely at the UK rate, the current mix of positive and negative earnings in the various jurisdictions the Company operates in and valuation allowances which reduce the amount of tax benefit recognized. Additionally, the Company is calculating current tax charges in certain U.S. and non-U.S. jurisdictions in respect of uncertain tax positions.

The effective tax rate for the 13 weeks ended March 31, 2024 differs from the US statutory rate of 21% primarily due to the mix of positive and negative earnings in the various jurisdictions the Company operates in and valuation allowances which reduced the amount of tax benefit recognized on the pretax book loss.

Valuation allowances have been recorded against the incremental deferred tax assets recognized for tax losses, share-based compensation, and excess interest primarily in the U.K., U.S. and Hong Kong. The Company continues to evaluate all positive and negative evidence to assess the realizability of its net deferred tax assets and it is reasonably possible that there may be a change in the valuation allowance within the next twelve months.

The gross unrecognized tax benefits have increased by $1million in the 13 weeks ended March 30, 2025.

The Company has carried out an assessment of the impact of the BEPS Pillar Two Minimum Tax legislation and has concluded that these new rules will not have a material impact on the Company's effective tax rate or tax payments for this period. The Company will undertake this assessment for subsequent reporting periods to monitor its compliance with the Global Anti-Base Erosion (GloBE) rules for fiscal 2025.

The Company's core operations comprise of Houses, hotels and restaurants across a number of territories, which are managed on a geographical basis. There is a segment managing director for each of the UK, The Americas, Europe and Rest of the World ("RoW") who is responsible for Houses, hotels and restaurants in that region. Each operating segment manager reports directly to the Company's Chief Operating Decision Maker ("CODM"), the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer combined. In addition to Houses, hotels and restaurants, the Company offers other products and services, such as retail, home & beauty products and services, which comprise its Retail operating segment; access to Soho Works collaboration spaces across the UK and North America, which comprise its Soho Works operating segment; and memberships for people who live in cities where physical Houses do not exist, which comprise its Cities Without Houses operating segment. The Retail, Soho Works, and Cities Without Houses operating segments also have segment managers which report directly to the CODM and are managed separately from the Houses, hotels and restaurants in each region.

The Company has identified the following three reportable segments:

The Company analyzed the results of the Retail, Soho Works, Soho Restaurants, and Cities Without Houses operating segments and concluded that they did not warrant separate presentation as reportable segments as they do not provide additional useful information to the readers of the financial statements. Therefore, these segments are included as part of an "All Other" category. The historical North America reportable segment has been renamed to The Americas; however, there is no change to the manner in which the segment was previously presented.

Intercompany revenues and costs among the reportable segments are not material and are accounted for as if the sales were to third parties because these items are based on negotiated fees between the segments involved. All intercompany transactions and balances are eliminated in consolidation. Intercompany revenues and costs between entities within a reportable segment are eliminated to arrive at segment totals. Segment revenue includes revenue of certain equity method investments, which are considered stand-alone operating segments, which are therefore not included in revenues as part of these unaudited condensed consolidated financial statements. Eliminations between segments are separately presented. Corporate results include amounts related to corporate functions such as administrative costs and professional fees. Income tax expense is managed by Corporate on a consolidated basis and is not allocated to the reportable segments.

The Company manages and assesses the performance of the reportable segments by Reportable segments EBITDA, which is defined as net income (loss) before depreciation and amortization, interest expense, net, provision (benefit) for income taxes, adjusted to take account of the impact of

The following tables present disaggregated revenue for the 13 weeks ended March 30, 2025 and March 31, 2024 and the key financial metrics reviewed by the CODM for the Company's reportable segments:

The following tables present the reconciliation of reportable segment EBITDA to total consolidated segment revenue: