George Kelly: Hi everybody. Thanks for taking my questions. So first one for you is on the other revenue category. I was curious if you could help us sort of think about growth this year. I know the Soho Home business, I think you said in the quarter it grew over a 100%, so just trying to frame sort of expectations for 2023 that you bake into your guidance.
Andrew Carnie: Thanks, George. And so when we think about the hierarchy of the revenue growth next year, I’d put it as we expect membership revenue to grow the fastest, followed by in-house revenue, followed by other revenue. There are parts of that other revenue that we expect to grow really quickly. So for example, we still expect Soho Home to have really strong growth. However, we’re taking a more tempered expectation there given the overall backdrop in home products and we’re really focusing on profitability there, while we’ll still deliver really strong growth. The other components of that is Scorpios should continue to have strong growth. Our works business should continue to have strong growth, but more measured growth in this past year.
The LINE and the Neds we’ve opened up a few over the past year, and so those should continue to have growth. But one of the things that have also been in there have been legacy restaurants and townhouses, and we’re not growing that business really as quickly, and we’ve also streamlined some of that business and so that will weigh on some of the growth. And so, other businesses that, we’ve been investing behind in that segment will continue to grow really quickly and strong, while others are not going to have as much growth. We’ve also, actually, let me just, let me add one thing back to our point earlier in the prepared remarks about how we’re trying to take a prudent approach to thinking about like-for-like sales in 2023 versus 2022, we’ve taken that same view on those restaurants and townhouses for 2023.
George Kelly: Okay, great. And then two other quick ones. I know you don’t guide to free cash flow, but can you, do you expect to be free cash flow positive in 2023 or can you talk at all, I don’t know if you want to talk to CapEx or however you could answer that. And then second question is, you commented in the prepared remarks about changing the incentive structure on, I believe you were talking about kind of house level management. Can you detail just what those changes were and maybe what it was before these adjustments? And that’s all I had, thank you.
Thomas Allen: Right. So I’ll take the first question, Andrew will take the second one. So just on free cash flow, we do expect to be free cash flow positive in 2023. When you think about our kind of second strategic pillar driving higher profitability, internally we also really think about free cash flow too. We — in the presentation we talked about how we expect our CapEx to be lower in 2023 versus 2022. That’s benefiting both from us moving more and more asset light as well as us just being more mindful about CapEx and getting to free cash flow, which I know a lot of investors and we, and obviously we won. The only thing I would say about seasonality is, do remember the seasonality of our business, first quarter is the lowest. So I don’t know if we’ll be free cash flow positive in the first quarter, but we should turn quickly thereafter.
Andrew Carnie: Hey, on the House incentives, so what we wanted to do as part of our improving our value for members is, we are super focused on improving the service we provide in our houses and also improving our food. And food is more diversification across our houses, quality, seasonality services, quicker service, high quality service, more personal service. So what we’ve done to really drive that forward is with our leadership teams in our houses, we’re now incentivizing them on a quarterly basis based on the performance, both financially, but more importantly their performance on improving member experience, which we can now measure really, really well. And it’s another key area that we’ve evolved and developed as part of our obsession on improving our members experiencing across all our 41 houses globally.
George Kelly: Thank you.
Operator: Your next question is from Shaun Kelley of Bank of America. Please go ahead. Your line is open.
Shaun Kelley: Hi, good morning or afternoon everyone. Thanks for taking my question. First would maybe be Thomas or Andrew, could you give us a little bit more color on just the consumer environment? Obviously there’s been a bit of consternation about how the European consumer in particular would react to some of the, just the broader macro. I think on the travel side, it sounds to us like things have actually held in really well, but could you just give us a little bit of color about maybe how that worked in the quarter and what some of your maybe forward expectations are just yes, for the booking window or what you can see right now in the business?
Andrew Carnie: Thanks Shaun. So when we think about what we’re seeing in terms of current trends and trends in the quarter, when we look at in-house revenue growth versus 2019 on like-for-like houses, you actually saw an acceleration in the fourth quarter. I think on the third quarter call we, and during the summer we talked about how we were seeing kind of low double digits, low teens growth in those, in that metric, in like-for-like growth rates 2019, that accelerated after about 20% in the fourth quarter. When we look at January and February and we look at the past few weeks, we’ve seen relatively similar growth to what we saw in that fourth quarter up close to 20%.
Shaun Kelley: Got it. Very, very helpful. And then second question, and this one might be a little technical, but when we kind of think about the operating expenses for the in-house operations, we kind of think about it as a ratio relative to in-house revenue. And I’m kind of curious, I mean that that number did come down sequentially about 120%. You talked about a lot of progress in December and initiatives. So, is it possible, do you meaningfully better than the 120% as we kind of start moving through the years is that embedded in the expectation and sort of maybe some of the pros and cons around leverage in that expense base?
Andrew Carnie: Yes, so Shaun, yes, we’re continuing to work so on, do you remember there is some fourth quarter benefit and seasonal benefit to that, but we, that is a key metric that we’re looking at. And as we talked about, as we showed with our guide, we are expecting to get cost leverage through our business. When we think about wages, we really started to see strong improvements in that, in our wages incentive revenue, starting in October, but it really started to take hold in December and we’re still seeing improvements as we go through the months comparing it to prior comparable periods. And so, we’re not going to get into guiding to our in-house expense ratio, but you can see where EBITDA is and you can see that we are expecting to see good cost leverage.
Shaun Kelley: Great, thank you very much.
Operator: Your last question is from Ali Naqvi of HSBC of London. Please go ahead. Your line is open.
Ali Naqvi: Hi, thanks for taking the question. Just in terms of the staff costs longer term, where do you expect that to reach as you work through all these initiatives on and anything else? And then secondly, on your wait list, obviously it’s at all-time highs now, you used to give some qualitative comments on how much of that wait list actually converts into members, and I’m just wondering whether that’s changed at all in sort of recent quarters? And then finally, obviously with the consumer demand environment that we have, is there anything happening to the member mix that we should be aware of, for example, as travel has restarted up, people moving to more every house members versus single house memberships? Thank you.
