Segments

6 Months Ended

Jul. 03, 2022

Segment Reporting [Abstract]

Segments

18.Segments

The Company’s core operations comprise of Houses and restaurants across a number of territories, which are managed on a geographical basis. In addition to Houses 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 Company has identified the following three reportable segments:

•UK,

•North America, and

•Europe and ROW.

The manner in which the Company’s Chief Operating Decision Maker (“CODM”) assesses information for decision-making purposes changed during the fourth quarter of the fiscal year ended January 2, 2022. SHD, which was previously a separate reportable segment, is no longer a separate operating segment or reportable segment since the CODM does not review discrete financial information for the business. In addition, Soho Restaurants, which was previously not a separate operating or reportable segment, became a separate operating segment since the CODM reviews discrete financial information for the business. The Company restated segment information for the historical periods presented herein to conform to the current

presentation. This change in segment presentation does not affect the Company’s unaudited condensed consolidated statements of operations, balance sheets or statements of cash flows.

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 Company manages and assesses the performance of the reportable segments by adjusted 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 certain non-cash and other items that the Company does not consider in its evaluation of ongoing operating performance. These other items include, but are not limited to, loss (gain) on sale of property and other, net, share of loss (profit) of equity method investments, foreign exchange, pre-opening expenses, non-cash rent, deferred registration fees, net, deferred revenue from House Introduction Credits, share of equity method investments adjusted EBITDA, share-based compensation expense, and certain other expenses.

The following tables present disaggregated revenue for the 13 weeks and 26 weeks ended July 3, 2022 and July 4, 2021 and the key financial metrics reviewed by the CODM for the Company’s reportable segments:

	For the 13 Weeks Ended July 3, 2022
(in thousands)	North America			UK			Europe & ROW			Reportable Segment Total			All Other		Total
Membership revenues	$	33,766		$	18,465		$	7,419		$	59,650		$	9,015	$	68,665
In-House revenues		49,666			41,652			25,039			116,357			—		116,357
Other revenues		19,821			13,943			10,691			44,455			26,964		71,419
Total segment revenue		103,253			74,060			43,149			220,462			35,979		256,441
Elimination of equity accounted revenue		(3,670	)		(1,912	)		(7,089	)		(12,671	)		—		(12,671	)
Consolidated revenue	$	99,583		$	72,148		$	36,060		$	207,791		$	35,979	$	243,770

	For the 13 Weeks Ended July 4, 2021
(in thousands)	North America			UK			Europe & ROW			Reportable Segment Total			All Other		Total
Membership revenues	$	22,344		$	14,423		$	5,062		$	41,829		$	5,044	$	46,873
In-House revenues		24,172			17,831			5,248			47,251			—		47,251
Other revenues		9,914			6,356			4,777			21,047			15,315		36,362
Total segment revenue		56,430			38,610			15,087			110,127			20,359		130,486
Elimination of equity accounted revenue		(2,597	)		(1,372	)		(2,438	)		(6,407	)		—		(6,407	)
Consolidated revenue	$	53,833		$	37,238		$	12,649		$	103,720		$	20,359	$	124,079

	For the 26 Weeks Ended July 3, 2022
(in thousands)	North America			UK			Europe & ROW			Reportable Segment Total			All Other		Total
Membership revenues	$	63,058		$	35,636		$	14,393		$	113,087		$	16,873	$	129,960
In-House revenues		90,733			79,690			36,947			207,370			—		207,370
Other revenues		35,392			26,214			11,339			72,945			47,421		120,366
Total segment revenue		189,183			141,540			62,679			393,402			64,294		457,696
Elimination of equity accounted revenue		(7,107	)		(3,716	)		(11,095	)		(21,918	)		—		(21,918	)
Consolidated revenue	$	182,076		$	137,824		$	51,584		$	371,484		$	64,294	$	435,778

	For the 26 Weeks Ended July 4, 2021
(in thousands)	North America			UK			Europe & ROW			Reportable Segment Total			All Other		Total
Membership revenues	$	43,602		$	28,054		$	10,147		$	81,803		$	7,544	$	89,347
In-House revenues		38,428			17,891			7,673			63,992			—		63,992
Other revenues		17,901			6,895			4,801			29,597			26,595		56,192
Total segment revenue		99,931			52,840			22,621			175,392			34,139		209,531
Elimination of equity accounted revenue		(7,666	)		(1,409	)		(3,976	)		(13,051	)		—		(13,051	)
Consolidated revenue	$	92,265		$	51,431		$	18,645		$	162,341		$	34,139	$	196,480

The following tables present the reconciliation of reportable segment adjusted EBITDA to total consolidated segment revenue and the reconciliation of net loss to adjusted EBITDA:

	For the 13 Weeks Ended July 3, 2022
(in thousands)	North America			UK			Europe & ROW			Reportable Segment Total			All Other			Total
Total consolidated segment revenue	$	99,583		$	72,148		$	36,060		$	207,791		$	35,979		$	243,770
Total segment operating expenses		(84,297	)		(59,498	)		(32,998	)		(176,793	)		(35,862	)		(212,655	)
Share of equity method investments adjusted EBITDA		702			209			1,454			2,365			—			2,365
Reportable segments adjusted EBITDA		15,988			12,859			4,516			33,363			117			33,480
Unallocated corporate overhead																	(11,048	)
Consolidated adjusted EBITDA																	22,432
Depreciation and amortization																	(22,688	)
Interest expense, net																	(18,778	)
Income tax expense																	(509	)
Loss on sale of property and other, net																	(122	)
Share of profit of equity method investments																	1,342
Foreign exchange																	(57,176	)
Pre-opening expenses																	(3,741	)
Non-cash rent(1)																	2,413
Deferred registration fees, net																	507
Share of equity method investments adjusted EBITDA																	(2,365	)
Share-based compensation expense																	(4,274	)
Other expenses, net(2)																	(596	)
Net loss																$	(83,555	)

(1)Includes the effect of a prior-period error correction, as discussed in Note 2, Summary of Significant Accounting Policies—Basis of Presentation.

(2)Includes membership credits expense, COVID-19 related charges and corporate financing and restructuring costs.

	For 13 Weeks Ended July 4, 2021
(in thousands)	North America			UK			Europe & ROW			Reportable Segment Total			All Other			Total
Total consolidated segment revenue	$	53,833		$	37,238		$	12,649		$	103,720		$	20,359		$	124,079
Total segment operating expenses		(42,933	)		(38,179	)		(13,886	)		(94,998	)		(28,675	)		(123,673	)
Share of equity method investments adjusted EBITDA		652			98			706			1,456			—			1,456
Reportable segments adjusted EBITDA		11,552			(843	)		(531	)		10,178			(8,316	)		1,862
Unallocated corporate overhead																	(11,471	)
Consolidated adjusted EBITDA																	(9,609	)
Depreciation and amortization																	(21,905	)
Interest expense, net																	(17,018	)
Income tax expense																	(3	)
Gain on sale of property and other, net																	6,903
Share of loss of equity method investments																	(130	)
Foreign exchange																	(1,055	)
Pre-opening expenses																	(6,493	)
Non-cash rent																	4,716
Deferred registration fees, net																	(10	)
Share of equity method investments adjusted EBITDA																	(1,456	)
Share-based compensation expense																	(2,548	)
Other expenses, net(1)																	(8,500	)
Net loss																$	(57,108	)

(1) Includes membership credits expense, COVID-19 related charges and corporate financing and restructuring costs.

	For the 26 Weeks Ended July 3, 2022
(in thousands)	North America			UK			Europe & ROW			Reportable Segment Total			All Other			Total
Total consolidated segment revenue	$	182,076		$	137,824		$	51,584		$	371,484		$	64,294		$	435,778
Total segment operating expenses		(147,809	)		(111,723	)		(53,854	)		(313,386	)		(69,833	)		(383,219	)
Share of equity method investments adjusted EBITDA		1,287			392			2,025			3,704			—			3,704
Reportable segments adjusted EBITDA		35,554			26,493			(245	)		61,802			(5,539	)		56,263
Unallocated corporate overhead																	(21,917	)
Consolidated adjusted EBITDA																	34,346
Depreciation and amortization																	(45,519	)
Interest expense, net																	(34,495	)
Income tax expense																	(57	)
Gain on sale of property and other, net																	1,541
Share of profit of equity method investments																	1,740
Foreign exchange																	(74,250	)
Pre-opening expenses																	(7,773	)
Non-cash rent(1)																	(990	)
Deferred registration fees, net																	(1,882	)
Share of equity method investments adjusted EBITDA																	(3,704	)
Share-based compensation expense																	(12,077	)
Other expenses, net(2)																	(1,061	)
Net loss																$	(144,181	)

(1)Includes the effect of a prior-period error correction, as discussed in Note 2, Summary of Significant Accounting Policies—Basis of Presentation.

(2)Includes membership credits expense, COVID-19 related charges and corporate financing and restructuring costs.

	For 26 Weeks Ended July 4, 2021
(in thousands)	North America			UK			Europe & ROW			Reportable Segment Total			All Other			Total
Total consolidated segment revenue	$	92,265		$	51,431		$	18,645		$	162,341		$	34,139		$	196,480
Total segment operating expenses		(75,956	)		(51,745	)		(21,486	)		(149,187	)		(47,652	)		(196,839	)
Share of equity method investments adjusted EBITDA		1,558			(16	)		785			2,327			—			2,327
Reportable segments adjusted EBITDA		17,867			(330	)		(2,056	)		15,481			(13,513	)		1,968
Unallocated corporate overhead																	(18,891	)
Consolidated adjusted EBITDA																	(16,923	)
Depreciation and amortization																	(39,750	)
Interest expense, net																	(46,622	)
Income tax benefit																	820
Gain on sale of property and other, net																	6,903
Share of loss of equity method investments																	(826	)
Foreign exchange																	(15,922	)
Pre-opening expenses																	(11,318	)
Non-cash rent																	(5,707	)
Deferred registration fees, net																	389
Share of equity method investments adjusted EBITDA																	(2,327	)
Share-based compensation expense																	(4,677	)
Other expenses, net(1)																	(14,185	)
Net loss																$	(150,145	)

(1)Includes membership credits expense, COVID-19 related charges and corporate financing and restructuring costs.

	For the 13 Weeks Ended						For the 26 Weeks Ended
(in thousands)	July 3, 2022			July 4, 2021			July 3, 2022			July 4, 2021
Net loss	$	(83,555	)	$	(57,108	)	$	(144,181	)	$	(150,145	)
Depreciation and amortization		22,688			21,905			45,519			39,750
Interest expense, net		18,778			17,018			34,495			46,622
Income tax expense (benefit)		509			3			57			(820	)
EBITDA		(41,580	)		(18,182	)		(64,110	)		(64,593	)
Loss (gain) on sale of property and other, net		122			(6,903	)		(1,541	)		(6,903	)
Share of (profit) loss of equity method investments		(1,342	)		130			(1,740	)		826
Foreign exchange(1)		57,176			1,055			74,250			15,922
Pre-opening expenses (2)		3,741			6,493			7,773			11,318
Non-cash rent(1)		(2,413	)		(4,716	)		990			5,707
Deferred registration fees, net		(507	)		10			1,882			(389	)
Share of equity method investments adjusted EBITDA		2,365			1,456			3,704			2,327
Share-based compensation expense		4,274			2,548			12,077			4,677
Other expenses, net (3)		596			8,500			1,061			14,185
Adjusted EBITDA	$	22,432		$	(9,609	)	$	34,346		$	(16,923	)

(1)Includes the effect of a prior-period error correction, as discussed in Note 2, Summary of Significant Accounting Policies – Basis of Presentation.

(2)The entire balance of these costs is related to pre-opening activities for our Houses in each of the periods presented.

(3)Represents other items included in operating expenses, which are outside the normal scope of the Company’s ordinary activities or non-cash, including expenses incurred in respect of membership credits of $1 million and $1 million for the 13 weeks ended July 3, 2022 and July 4, 2021, respectively, and $1 million and $4 million for the 26 weeks ended July 3, 2022 and July 4, 2021. Other expenses, net also include IPO-related costs of $7 million and corporate financing and restructuring costs of $2 million incurred during the 26 weeks ended July 4, 2021.

The following table presents long-lived asset information (which includes property and equipment, net, operating lease right-of-use assets and equity method investments) by geographic area as of July 3, 2022 and January 2, 2022. Asset information by segment is not reported internally or otherwise regularly reviewed by the CODM.

	As of
(in thousands)	July 3, 2022		January 2, 2022
Long-lived assets by geography
North America	$	868,658	$	806,617
United Kingdom		511,385		571,716
Europe		250,600		270,657
Asia		51,411		56,583
Total long-lived assets	$	1,682,054	$	1,705,573