The network effect isn't something you find only with social media and e-commerce companies. Vail Resorts (NYSE:MTN) has built up an impressive network of ski resorts around the world, and it's used its lineup of high-profile destinations as an incentive for skiers and boarders to buy season passes that grant access to all of its properties. Not only has that strategy enabled Vail Resorts to get through some tough seasons from a weather perspective, but it's also given the company the chance to make further acquisitions that enhance its value proposition for its loyal season-pass holders.

Coming into Thursday's fiscal third-quarter financial report, Vail Resorts investors understood that poor weather conditions in many of its key regions could potentially have an impact on short-term results. But Vail's results were actually better than many had expected, and the company's recently announced acquisitions of new resort properties have many shareholders more excited than ever about its prospects as the key selling period for early-season passes ramps up during the summer months.

Red cable car going up the side of a mountain with evergreen pine trees, with a snow-capped mountain range in the background.

Image source: Vail Resorts.

How Vail Resorts fared during the spring

Vail Resorts' fiscal third-quarter results showed solid growth. Total revenue was higher by 6% to $844.5 million, which was better than the 4% growth rate most investors had expected from the ski resort operator. Net income soared more than 40% to $256.2 million, and the resulting earnings of $6.17 per share edged above the consensus forecast among those following the stock for $6.12 per share on the bottom line.

Fundamentally, Vail's operations showed continued success in the key mountain segment. Lift revenue rose 8%, with last year's purchase of the Stowe resort in Vermont adding some incremental gains to what Vail produced from stronger season-pass sales for the season. Ancillary items like ski school, equipment rentals, and retail sales were all higher as well. Vail exercised reasonable cost controls, holding operating expense increases to less than 7%. That discipline helped mountain segment operating profit post a 7% gain.

However, Vail has room for improvement elsewhere. In the lodging segment, revenue was down 0.2% from year-ago levels, despite slight gains in occupancy rates and flat readings on average daily room rates at Vail's hotels and condominium properties. Segment operating profit was also down 2%. Vail's real-estate unit also continued to decline, with its minimal revenues sinking by another 35% compared to the third quarter of fiscal 2017.

CEO Rob Katz was quite happy with how Vail did. "We are pleased with our performance in the quarter and for the full 2017/2018 North American ski season," Katz said, "particularly given the challenging weather conditions across the western U.S. for much of the season." The CEO pointed to "the strength of the high-end consumer's demand for ski vacations once conditions improved across our network" as a key driver of Vail's results.

Where Vail Resorts is growing next

Vail is also optimistic about how early 2018/2019 season pass sales are going. Through May 29, pass sales are up 12% on a unit basis and 19% on a dollar basis, with particularly good performance at Whistler Blackcomb in British Columbia and solid performance in the key Colorado and Lake Tahoe regions. Unit pass sales at Perisher in Australia, whose Southern Hemisphere ski season starts this weekend, are up almost 20% as well, with Vail having chosen to make a season-pass partnership with Japan's Hakuba Valley to stoke sales.

Yet the most exciting news for Vail came out earlier this month, when the ski resort operator announced the acquisition of Triple Peaks, a privately held company that is the parent of ski resorts including Okemo in Veront, Mount Sunapee in New Hampshire, and Crested Butte in Colorado. The acquisition of the family-owned business will cost a total of $237 million, with $82 million going to Triple Peaks and $155 million going toward paying off leases to third-party landlord Ski Resort Holdings. In addition, Vail will pay $67 million directly to Ski Resort Holdings to buy the Stevens Pass Resort northeast of Seattle. The moves will dramatically increase Vail's exposure to the U.S. Northeast while also filling in some gaps in the western part of the country.

Based on the numbers, Vail narrowed its full-year guidance for fiscal 2018. A new range of $612 million to $624 million for pre-tax operating profit tended toward the middle of its previously broader figures, although new guidance for $360 million to $381 million in net income skewed a bit toward the lower end of its previous range.

Vail Resorts investors celebrated the news, and the stock jumped 4% in pre-market trading following the announcement. With so much future promise, Vail's expanding network effect could keep lifting the company's growth prospects for years to come.