Soho House Swings to Q3 Loss Amidst Revenue Growth, Merger Looms

TL;DR

**Soho House's Q3 loss is a red flag, but the Yucaipa merger could be a lifeline if it closes, otherwise, expect more volatility.**

AI Summary

Soho House & Co Inc. reported total revenues of $370.75 million for the 13 weeks ended September 28, 2025, an increase from $333.37 million in the prior year period. For the 39 weeks ended September 28, 2025, total revenues reached $983.42 million, up from $898.26 million in the same period of 2024. Membership revenues grew to $122.70 million for the quarter and $354.24 million year-to-date, representing increases of 14.26% and 14.75% respectively. Despite revenue growth, the company posted a net loss of $17.01 million for the quarter, a significant decline from a net income of $0.72 million in the prior year quarter. However, for the 39-week period, net income was $14.63 million, a substantial improvement from a net loss of $71.35 million in the comparable 2024 period. A key business change is the pending merger with EH Parent LLC, an affiliate of The Yucaipa Companies LLC, announced on August 15, 2025, which introduces uncertainties related to its consummation and potential impacts on business relationships and operations. Risks include the obligation to pay a termination fee if the merger agreement is terminated and the distraction of management personnel from day-to-day operations due to transaction-related costs. The strategic outlook is heavily influenced by the merger, with the all-cash per share price being taxable to U.S. holders and the risk of Class A common stock price fluctuation if the merger is not completed.

Why It Matters

This 10-Q filing is critical for investors as Soho House & Co Inc. is undergoing a significant merger with EH Parent LLC, an affiliate of The Yucaipa Companies LLC. While the company showed strong revenue growth, with membership revenues up 14.26% for the quarter, the net loss of $17.01 million for the quarter raises questions about profitability amidst expansion. The competitive landscape in luxury hospitality and private members' clubs is intense, and the merger's success or failure will dictate Soho House's future market position and ability to compete effectively. Employees face uncertainty regarding the post-merger organizational structure, and customers may experience changes in service or offerings depending on the new ownership's strategic direction. The broader market will watch this transaction as a bellwether for private equity interest in the experiential luxury sector.

Risk Assessment

Risk Level: high — The risk level is high primarily due to the pending merger with EH Parent LLC, an affiliate of The Yucaipa Companies LLC, announced on August 15, 2025. The filing explicitly states "uncertainties related to the consummation of the Merger" and the "obligation to pay the Termination Fee" if the Merger Agreement is terminated. Furthermore, the company faces "substantial transaction-related costs" and the "distraction of management personnel from day-to-day operations," which could negatively impact financial performance.

Analyst Insight

Investors should closely monitor the progress and ultimate consummation of the merger with EH Parent LLC. Given the current net loss for the quarter and the inherent risks associated with a pending acquisition, a cautious approach is warranted. Consider holding existing positions if you believe the merger will close successfully, but be prepared for potential volatility if there are delays or termination of the agreement.

Financial Highlights

debt To Equity

N/A

revenue

$370.75M

operating Margin

N/A

total Assets

$2.68B

total Debt

$1.51B

net Income

($17.01M)

eps

N/A

gross Margin

N/A

cash Position

$142.49M

revenue Growth

+11.23%

Revenue Breakdown

Key Numbers

• $370.75M — Total Revenues (13 weeks) (Increased from $333.37M in prior year, showing growth.)
• $983.42M — Total Revenues (39 weeks) (Increased from $898.26M in prior year, indicating strong year-to-date performance.)
• $122.70M — Membership Revenues (13 weeks) (Increased by 14.26% from $107.39M in prior year, a key growth driver.)
• ($17.01M) — Net Income (Loss) (13 weeks) (Swung from a $0.72M net income in prior year, a significant quarterly decline.)
• $14.63M — Net Income (Loss) (39 weeks) (Improved significantly from a ($71.35M) net loss in prior year, showing overall year-to-date recovery.)
• $2.68B — Total Assets (Increased from $2.44B as of December 29, 2024, indicating asset expansion.)
• $3.03B — Total Liabilities (Increased from $2.77B as of December 29, 2024, outpacing asset growth.)
• ($348.90M) — Total Shareholders' Deficit (Worsened from ($329.46M) as of December 29, 2024, reflecting accumulated losses.)
• $98.76M — Net Cash Provided by Operating Activities (39 weeks) (Increased from $62.79M in prior year, showing improved operational cash generation.)
• 195,567,724 — Shares Outstanding (Total shares as of November 4, 2025, relevant for per-share calculations and merger valuation.)

Key Players & Entities

• Soho House & Co Inc. (company) — Registrant and subject of the 10-Q filing
• EH Parent LLC (company) — Acquiring entity in the pending merger
• The Yucaipa Companies LLC (company) — Affiliate of the acquiring entity, EH Parent LLC
• EH MergerSub Inc. (company) — Wholly owned subsidiary of Parent, merging with Soho House & Co Inc.
• New York Stock Exchange (regulator) — Exchange where Class A Common Stock is registered
• $370,750 (dollar_amount) — Total revenues for the 13 weeks ended September 28, 2025
• $17,010 (dollar_amount) — Net loss for the 13 weeks ended September 28, 2025
• $14,631 (dollar_amount) — Net income for the 39 weeks ended September 28, 2025
• August 15, 2025 (date) — Date of the Merger Agreement
• 195,567,724 (dollar_amount) — Total shares outstanding as of November 4, 2025

FAQ

Risk Factors

• Merger Agreement Termination [high — legal]: The company faces a significant risk of paying a substantial termination fee if the merger agreement with EH Parent LLC is terminated. This fee could materially impact the company's financial position.
• Management Distraction [medium — operational]: The pending merger with EH Parent LLC poses a risk of distracting key management personnel from day-to-day operations. This distraction could negatively affect business performance and strategic execution.
• Merger Completion Uncertainty [high — financial]: The consummation of the merger with EH Parent LLC is subject to various conditions, introducing uncertainty. If the merger does not complete, the Class A common stock price could experience significant fluctuations.
• Taxable Merger Consideration [medium — financial]: The all-cash per share price offered in the merger is taxable to U.S. holders. This tax implication could influence shareholder decisions and the overall reception of the transaction.
• Increased Liabilities [medium — financial]: Total liabilities increased from $2.77B to $3.03B, outpacing asset growth. This trend, coupled with a worsening shareholders' deficit, indicates increased financial leverage and potential financial strain.

Industry Context

Soho House operates in the competitive hospitality and private club industry, characterized by high fixed costs and sensitivity to economic conditions. The industry is seeing a trend towards experiential offerings and personalized services to attract and retain members.

Regulatory Implications

The company must navigate standard hospitality regulations, including health, safety, and licensing requirements. The pending merger introduces potential scrutiny from antitrust authorities and requires compliance with securities regulations regarding disclosure and transaction reporting.

What Investors Should Do

1. Monitor Merger Progress
2. Analyze Quarterly Performance Trends
3. Evaluate Balance Sheet Leverage

Key Dates

• 2025-08-15: Merger Agreement Announced — Introduced significant strategic uncertainty and potential financial risks related to transaction costs and completion.
• 2025-09-28: End of Third Quarter — Reporting period for the Q3 2025 financial results, showing revenue growth but a quarterly net loss.
• 2024-09-29: End of Third Quarter (Prior Year) — Comparison period for Q3 2025 results, highlighting a swing from net income to net loss.

Glossary

Shareholders' Deficit

A negative shareholders' equity, indicating that a company's liabilities exceed its assets. (Soho House's shareholders' deficit worsened to ($348.90M), signaling accumulated losses and a potentially weaker financial position.)

Deferred Revenue

Revenue that has been received by a company but not yet earned, typically from advance payments for services or goods not yet delivered. (The company has significant deferred revenue ($136.06M current, $25.60M non-current), representing future revenue streams but also an obligation to deliver.)

Operating lease liabilities

Obligations arising from leases for the use of assets in operations, recognized on the balance sheet under current accounting standards. (Soho House has substantial operating lease liabilities ($1.18B current portion, $1.30B non-current portion), reflecting its extensive physical footprint.)

Goodwill

An intangible asset that arises when one company acquires another for a price greater than the fair market value of its identifiable net assets. (The increase in goodwill to $208.43M suggests recent acquisitions or an increase in the value attributed to acquired businesses.)

Year-Over-Year Comparison

Soho House & Co Inc. demonstrated revenue growth in the 13 weeks ended September 28, 2025, with total revenues up to $370.75M from $333.37M in the prior year. However, this growth was accompanied by a significant swing from a net income of $0.72M to a net loss of $17.01M in the same period. While total assets increased to $2.68B, total liabilities also grew to $3.03B, leading to a worsened shareholders' deficit of ($348.90M). New risks related to the pending merger with EH Parent LLC, including termination fees and management distraction, have been introduced.

Key Financial Figures

• $0.01 — tered Class A Common Stock, par value $0.01 per share SHCO New York Stock Excha

Filing Documents

• shco-20250928.htm (10-Q) — 6439KB
• shco-ex10_1.htm (EX-10.1) — 210KB
• shco-ex10_2.htm (EX-10.2) — 370KB
• shco-ex31_1.htm (EX-31.1) — 35KB
• shco-ex31_2.htm (EX-31.2) — 35KB
• shco-ex32_1.htm (EX-32.1) — 21KB
• shco-ex32_2.htm (EX-32.2) — 21KB
• 0001193125-25-272387.txt ( ) — 21668KB
• shco-20250928.xsd (EX-101.SCH) — 2178KB
• shco-20250928_htm.xml (XML) — 4372KB

Financial Statements

Financial Statements 2 Unaudited Condensed Consolidated Balance Sheets as of September 28, 2025 and December 29, 2024 2 Unaudited Condensed Consolidated Statements of Operations for the 13 weeks and 39 weeks ended September 28, 2025 and September 29, 2024 4 Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the 13 weeks and 39 weeks ended September 28, 2025 and September 29, 2024 5 Unaudited Condensed Consolidated Statements of Changes in Shareholders' Deficit for the 13 weeks and 39 weeks ended September 29, 2024 6 Unaudited Condensed Consolidated Statements of Changes in Shareholders' Deficit for the 13 weeks and 39 weeks ended September 28, 2025 7 Unaudited Condensed Statements of Cash Flows for the 39 weeks ended September 28, 2025 and September 29, 2024 8 Notes to Condensed Consolidated Financial Statements 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 35 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 63 Item 4.

Controls and Procedures

Controls and Procedures 64 PART II. OTHER INFORMATION 65 Item 1.

Legal Proceedings

Legal Proceedings 65 Item 1A.

Risk Factors

Risk Factors 65 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 66 Item 3. Defaults Upon Senior Securities 66 Item 4. Mine Safety Disclosures 66 Item 5. Other Information 66 Item 6. Exhibits 68

Signatures

Signatures 69 i CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations and expenses, business strategies and plans, trends, market sizing, competitive position, industry environment, potential growth opportunities and product capabilities, among other things. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as "aim," "anticipates," "believes," "could," "estimates," "expects," "goal," "intends," "may," "plans," "potential," "predicts," "projects," "seeks," "should," "strive," "will," "would," or similar expressions and the negatives of those terms. As used in this report, any reference to Soho House & Co Inc.', Soho House & Co', SHCO,' our company,' the Company,' us,' we' and our' refers to Soho House & Co Inc., together with its consolidated subsidiaries. On August 15, 2025, the Company entered into the Agreement and Plan of Merger (as it may be amended, supplemented or modified from time to time, the "Merger Agreement"), dated as of August 15, 2025, by and among the Company, EH Parent LLC ("Parent"), a Delaware limited liability company and an affiliate of The Yucaipa Companies LLC, a Delaware limited liability company ("Yucaipa"), and EH MergerSub Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub" and, together with Parent, the "Buyer Parties"). Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation (the "Merger"). In connection

-FIN ANCIAL INFORMATION

PART I-FIN ANCIAL INFORMATION

Financial Stateme nts

Item 1. Financial Stateme nts. Soho House & Co Inc. Condensed Consoli dated Balance Sheets As of September 28, 2025 (Unaudited) and December 29, 2024 As of (in thousands, except for par value and share data) September 28, 2025 December 29, 2024 Assets Current assets Cash and cash equivalents $ 142,490 $ 152,716 Restricted cash 5,764 3,602 Accounts receivable, net 68,317 78,890 Inventories 65,268 54,419 Prepaid expenses and other current assets 123,386 98,774 Total current assets 405,225 388,401 Property and equipment, net 724,977 598,270 Operating lease assets 1,176,597 1,135,810 Goodwill 208,433 195,295 Other intangible assets, net 107,554 102,610 Equity method investments 41,277 13,217 Deferred tax assets 14,682 5,306 Other non-current assets 5,479 4,603 Total non-current assets 2,278,999 2,055,111 Total assets $ 2,684,224 $ 2,443,512 Liabilities and Shareholders' Deficit Current liabilities Accounts payable $ 90,603 $ 75,987 Accrued liabilities 132,755 98,482 Current portion of deferred revenue 136,064 134,360 Indirect, employee and corporate income taxes payable 48,557 33,889 Current portion of debt, net of debt issuance costs 31,797 34,618 Current portion of operating lease liabilities - sites trading less than one year 3,092 371 Current portion of operating lease liabilities - sites trading more than one year 63,435 57,078 Other current liabilities 58,327 39,377 Total current liabilities 564,630 474,162 Debt, net of current portion and debt issuance costs 704,032 656,868 Property mortgage loans, net of debt issuance costs 137,828 137,385 Operating lease liabilities, net of current portion - sites trading less than one year 27,820 90,081 Operating lease liabilities, net of current portion - sites trading more than one year 1,300,749 1,210,637 Finance lease liab

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