Core Viewpoint - Sonder Holdings Inc. announced the resignation of Chief Financial Officer Michael Hughes, effective August 15, 2025, while the search for a new CEO is ongoing, with expectations to appoint a permanent successor by the end of 2025 [1][2]. Company Overview - Sonder is a leading global brand offering premium, design-forward apartments and boutique hotels, catering to modern travelers since its launch in 2014 [2]. - The company operates in over 40 markets across nine countries and three continents, providing tech-enabled services and self-service features through the Sonder app [2]. Leadership Transition - The interim CEO, Janice Sears, expressed gratitude for Michael Hughes' contributions and emphasized the importance of identifying world-class executives to maximize Sonder's growth potential [2]. - The new CEO will be actively involved in the search for a new CFO as part of the long-term leadership succession plan [1][2].

PART I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Sonder operates a tech-enabled hospitality model, leasing and managing design-focused properties, recently partnering with Marriott and optimizing its portfolio, while addressing going concern uncertainties - Sonder operates a tech-enabled hospitality model, leasing, designing, and managing apartments and hotels for modern travelers, available through direct and indirect channels[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - A strategic licensing agreement with Marriott was announced in **August 2024**, with full integration completed in **Q2 2025**, making all Sonder properties bookable on Marriott's digital channels[21](index=21&type=chunk)[31](index=31&type=chunk) Portfolio Snapshot (as of Dec 31, 2024) | Metric | Value | | :--- | :--- | | Live Units | Over 9,900 | | Contracted Units | Over 800 | | Cities | 41 | | Countries | 9 | | Concentration (Top 5 Cities) | 37% of Live Units | | Concentration (Top 10 Cities) | 60% of Live Units | - The company implemented a portfolio optimization program in **November 2023**, resulting in agreements to exit or reduce rent for approximately **110 buildings (4,500 units)**, with about **3,200 units across 80 buildings** exited as of **December 31, 2024**[30](index=30&type=chunk) - Management has concluded there is **substantial doubt** about the Company's ability to continue as a going concern due to a history of net losses and negative operating cash flows, with mitigation plans including financing and cost optimization[63](index=63&type=chunk)[64](index=64&type=chunk) [Item 1A. Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including failure to achieve positive cash flow, forecast inaccuracies, macroeconomic impacts, and material weaknesses in internal controls, alongside going concern doubts - A primary risk is the potential failure to achieve **positive and sustainable Adjusted Free Cash Flow (Adjusted FCF)**, as restructuring and portfolio optimization initiatives are not guaranteed to yield expected benefits[70](index=70&type=chunk) - The company's forecasts and projections are subject to **significant uncertainty** and may differ materially from actual results if underlying assumptions prove incorrect[72](index=72&type=chunk) - There is **substantial doubt** about the company's ability to continue as a going concern, potentially affecting its stock price, capital raising, and stakeholder relationships[69](index=69&type=chunk)[216](index=216&type=chunk) - **Material weaknesses** in internal controls over financial reporting have been identified, potentially leading to material misstatements and impacting the ability to produce timely and accurate reports[69](index=69&type=chunk)[140](index=140&type=chunk) - The company is **not in compliance** with Nasdaq's listing requirements due to delinquent SEC filings, which could result in the delisting of its common stock and warrants[69](index=69&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) [Item 1B. Unresolved Staff Comments](index=52&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - There are **no unresolved staff comments**[245](index=245&type=chunk) [Item 1C. Cybersecurity](index=52&type=section&id=Item%201C.%20Cybersecurity) Sonder manages cybersecurity risks through a NIST-guided program with Board oversight and executive management, utilizing third-party consultants and insurance - The company's cybersecurity risk management and strategy is guided by the **National Institute of Standards and Technology (NIST) framework**, including risk assessments, network security, and employee training[247](index=247&type=chunk) - Board oversight for cybersecurity is administered by the Board and Audit Committee, with day-to-day management led by the **VP, Technical Product Management** and **Senior Director, Information Technology Compliance and Information Security**[251](index=251&type=chunk)[253](index=253&type=chunk) [Item 2. Properties](index=53&type=section&id=Item%202.%20Properties) Sonder's corporate staff primarily works remotely, with a main 170,000 sq ft warehouse in Fort Worth, Texas, deemed adequate for near-term needs - A substantial percentage of corporate staff works remotely, with leased office spaces being **immaterial to operations**[256](index=256&type=chunk) - The principal warehouse is a **170,000 sq. ft.** third-party facility in Fort Worth, Texas, with a lease expiring on **December 31, 2026**[257](index=257&type=chunk) [Item 3. Legal Proceedings](index=53&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, including landlord disputes, a securities class action, and stockholder derivative lawsuits, which it intends to vigorously defend - The company is involved in litigation with the landlord of its **20 Broad Street, NY property**, over alleged Legionella contamination and breach of lease, with the landlord seeking damages[617](index=617&type=chunk) - A putative securities class action lawsuit was filed in **April 2024**, alleging false and misleading statements regarding financial results and asset valuation between **March 2023 and March 2024**[618](index=618&type=chunk) - Several stockholder derivative lawsuits have been filed based on similar allegations as the class action, naming current and former officers and directors as defendants[620](index=620&type=chunk)[621](index=621&type=chunk)[622](index=622&type=chunk) [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[259](index=259&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=54&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Sonder's common stock and warrants trade on Nasdaq, with **135** record holders as of **July 7, 2025**, and no plans for future cash dividends or equity repurchases - Common stock (**SOND**) and Public Warrants (**SONDW**) are traded on the Nasdaq Global Select Market[261](index=261&type=chunk) - The company does not intend to declare or pay any **cash dividends** in the foreseeable future[262](index=262&type=chunk) [Item 6. [Reserved]](index=54&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=55&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Sonder's **2024** revenue increased to **$621.3 million** with a narrowed net loss, driven by RevPAR growth and portfolio optimization, while focusing on achieving positive Adjusted FCF and leveraging the Marriott partnership Key Financial Results (Year Ended Dec 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $621.3M | $602.1M | | Net Loss | $(224.1)M | $(295.7)M | | Loss from Operations | $(182.6)M | $(278.0)M | | Adjusted FCF (Non-GAAP) | $(89.5)M | $(119.6)M | | Adjusted EBITDA (Non-GAAP) | $(105.5)M | $(169.4)M | Key Business Metrics (Year Ended Dec 31) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Live Units (End of Period) | 9,900 | 12,200 | (18.9)% | | RevPAR | $159 | $151 | +5.3% | | ADR | $196 | $184 | +6.5% | | Occupancy Rate | 80.9% | 82.0% | (1.1) p.p. | - The company's primary focus is its **"Cash Flow Positive Plan,"** aiming for sustainable positive Adjusted FCF, with a **$30.1 million improvement** in **2024** Adjusted FCF compared to **2023**[279](index=279&type=chunk) - The portfolio optimization program, initiated in **November 2023**, has led to agreements to exit or reduce rent at approximately **110 buildings (4,500 units)**, improving property-level profitability despite decreasing Live Units[280](index=280&type=chunk)[285](index=285&type=chunk) - Subsequent to year-end, in **April 2025**, the company raised **$17.98 million** through preferred stock financing, amended debt agreements, and received the final **$7.5 million** from its Marriott agreement[273](index=273&type=chunk)[274](index=274&type=chunk)[277](index=277&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=78&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Sonder faces market risks including foreign currency exchange, interest rate, and inflation, which could impact operating costs, revenue, and consumer demand - The company faces **foreign currency exchange risk** from international revenue and expenses denominated in currencies other than the U.S. dollar[394](index=394&type=chunk)[395](index=395&type=chunk) - **Interest rate risk** primarily affects the company's debt, with management not anticipating material risks from current changes, though rising rates could hinder property development financing[397](index=397&type=chunk)[398](index=398&type=chunk) - **Inflation risk** could increase operating costs, construction expenses, and rent, while potentially dampening consumer demand for travel[399](index=399&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=79&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for **2024** and **2023**, with the auditor highlighting going concern uncertainty and critical audit matters related to leases, asset impairment, and preferred stock valuation - The independent auditor's report from **Deloitte & Touche LLP** expresses a fair presentation opinion but highlights **substantial doubt** about the Company's ability to continue as a going concern[405](index=405&type=chunk)[406](index=406&type=chunk) - Critical Audit Matters identified by the auditor include accounting for leases, impairment of long-lived assets, and the fair value of redeemable preferred stock, all involving **significant estimates and judgments**[410](index=410&type=chunk)[414](index=414&type=chunk)[421](index=421&type=chunk) Consolidated Balance Sheet Summary (As of Dec 31, 2024) | Account | Amount (in thousands) | | :--- | :--- | | **Total Assets** | **$1,137,177** | | Total Current Assets | $99,846 | | Operating Lease ROU Assets | $1,013,854 | | **Total Liabilities** | **$1,573,065** | | Total Current Liabilities | $338,547 | | Non-current Operating Lease Liabilities | $1,009,169 | | **Total Stockholders' Deficit** | **$(598,795)** | [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures](index=136&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure matters - None[658](index=658&type=chunk) [Item 9A. Controls and Procedures](index=136&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal controls were ineffective as of **December 31, 2024**, due to material weaknesses in lease accounting, asset impairment, preferred stock transactions, and COSO framework components, with remediation plans underway - Management concluded that as of **December 31, 2024**, the company's disclosure controls and procedures and internal controls over financial reporting were **not effective**[659](index=659&type=chunk)[662](index=662&type=chunk) - **Material weaknesses** were identified in processes for capturing and recording lease agreements, asset impairment evaluation, and reviewing preferred stock transactions[666](index=666&type=chunk)[667](index=667&type=chunk)[668](index=668&type=chunk) - Broader **material weaknesses** were identified related to the COSO framework, specifically in control activities, control environment, and information & communication components[669](index=669&type=chunk) - The company is implementing remediation plans, including hiring expertise, improving processes, and enhancing training, but these enhancements have not yet been fully remediated[670](index=670&type=chunk)[671](index=671&type=chunk)[673](index=673&type=chunk) [Item 9B. Other Information](index=139&type=section&id=Item%209B.%20Other%20Information) An immaterial misstatement in **Q3 2024** interim financials related to preferred stock valuation was corrected in the annual report, and the **2025** Annual Meeting of Stockholders is scheduled for **November 6, 2025** - An **immaterial correction** was made to the **Q3 2024** interim financial statements regarding Series A Preferred Stock valuation and a forward contract liability, now reflected in the annual financials[678](index=678&type=chunk)[679](index=679&type=chunk) - The **2025 Annual Meeting of Stockholders** is scheduled for **November 6, 2025**, with updated deadlines for stockholder proposals due to the date change[686](index=686&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=142&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[690](index=690&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=143&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details the company's directors and executive officers as of **July 7, 2025**, including Board structure, committee compositions, and the adopted Code of Business Conduct and Ethics - As of **July 7, 2025**, **Janice Sears** serves as Interim Chief Executive Officer and Chairperson of the Board, and **Michael Hughes** serves as Chief Financial Officer[692](index=692&type=chunk) - The Board of Directors consists of **seven members** and is divided into **three classes** with staggered three-year terms[718](index=718&type=chunk)[721](index=721&type=chunk) - The Board has four standing committees: **Audit, Compensation, Investment, and Nominating**, with detailed composition and primary oversight responsibilities[720](index=720&type=chunk)[726](index=726&type=chunk)[728](index=728&type=chunk)[730](index=730&type=chunk) - A **Code of Business Conduct and Ethics** has been adopted, applying to all employees and directors, and is available on the company's investor relations website[717](index=717&type=chunk) [Item 11. Executive Compensation](index=150&type=section&id=Item%2011.%20Executive%20Compensation) Sonder's executive compensation program for **2024** and **2025** includes base salary, bonuses, and equity awards, with details on named executive officers, outstanding awards, and non-employee director compensation 2024 Summary Compensation Table | Name and Principal Position | Year | Salary ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Francis Davidson (Former CEO) | 2024 | 360,000 | — | 362,469 | | Dominique Bourgault (Former CFO) | 2024 | 477,865 | — | 477,865 | | Martin Picard (Chief Real Estate Officer) | 2024 | 378,708 | — | 381,791 | | Katherine E. Potter (Former CLO) | 2024 | 450,865 | — | 451,582 | - In **March 2025**, the executive compensation program was revised to include an annual cash bonus plan (**STIP**) and a revised long-term incentive plan (**LTIP**) granting a mix of performance stock units (**PSUs**) and restricted stock units (**RSUs**)[751](index=751&type=chunk)[752](index=752&type=chunk)[753](index=753&type=chunk) - Due to delayed financial filings, the company's Form S-8 registration statement was not effective, leading to a **suspension of equity award grants and exercises** in **April 2024**[748](index=748&type=chunk) - Non-employee director compensation includes annual cash retainers and equity awards, with the policy amended in **December 2024** to adjust retainer amounts and equity grant values[777](index=777&type=chunk)[779](index=779&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=160&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details beneficial ownership of Sonder's voting securities as of **July 7, 2025**, including **5%** stockholders and a summary of securities authorized under equity compensation plans - As of **July 7, 2025**, significant beneficial owners (over **5%**) of voting securities include entities affiliated with **Atreides Foundation Master Fund LP**, **Polar Asset Management Partners Inc.**, **iNovia Growth Capital Inc.**, and **BlackRock Inc.**[794](index=794&type=chunk)[795](index=795&type=chunk) - All current directors and executive officers as a group beneficially own approximately **11.9%** of outstanding common stock and **3.7%** of Series A Preferred Stock[794](index=794&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2024) | Plan Category | Securities to be Issued Upon Exercise () | Weighted-Average Exercise Price ($) | Securities Remaining for Future Issuance () | | :--- | :--- | :--- | :--- | | Approved by Stockholders | 2,724,698 | 27.88 | 8,749,463 | | Not Approved by Stockholders | 173,323 | 12.19 | 326,677 | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=164&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) This section describes related party transactions since **2024**, including preferred stock financings involving key affiliates and executives, and outlines the Audit Committee's review policy and director independence determinations - Key related party transactions include the **August 2024** and **April 2025 Preferred Stock financings**, involving significant shareholders, former CEO **Francis Davidson**, and director **Sanjay Banker**[809](index=809&type=chunk)[812](index=812&type=chunk) - The company has a written Related Person Transaction Policy requiring Audit Committee review and approval for transactions exceeding **$120,000** where a related person has a material interest[814](index=814&type=chunk)[816](index=816&type=chunk) - The Board has determined that all directors are independent under Nasdaq listing standards, except for **Sanjay Banker** and **Francis Davidson**[819](index=819&type=chunk) [Item 14. Principal Accountant Fees and Services](index=167&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section details fees paid to **Deloitte & Touche LLP** for **2024** and **2023**, totaling approximately **$3.88 million** and **$4.48 million** respectively, all pre-approved by the Audit Committee Accountant Fees (in thousands) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | Audit Fees | $3,525 | $4,350 | | Audit-Related Fees | $348 | $131 | | Tax Fees | $0 | $0 | | All Other Fees | $4 | $2 | | **Total** | **$3,877** | **$4,483** | - The Audit Committee has a policy to **pre-approve all audit and permissible non-audit services** performed by the independent registered public accounting firm[826](index=826&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=169&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements and an extensive array of exhibits filed as part of the Annual Report on Form 10-K, including governance and material contracts - This item lists all financial statements and exhibits filed with the **10-K**, including governance documents, material contracts, and certifications[830](index=830&type=chunk)[831](index=831&type=chunk) [Item 16. Form 10-K Summary](index=184&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for this item - None[843](index=843&type=chunk)

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Fourth Quarter 2024 Financial Highlights](index=1&type=section&id=Fourth%20Quarter%202024%20Financial%20Highlights) In Q4 2024, Sonder's revenue saw a slight decrease of 2% year-over-year to $161 million, primarily due to an 18% reduction in Bookable Nights from its portfolio optimization program. However, the company achieved a significant turnaround in profitability, reporting a Net Income of $31 million compared to a loss in the prior year, heavily influenced by a $92 million positive change in the fair value of a forward contract. Key operational metrics showed strength, with RevPAR increasing by 19% to $180 and Occupancy Rate rising by three percentage points to 85% Q4 2024 Key Financial Metrics (vs. Q4 2023) | Metric | Q4 2024 | YoY Change | | :--- | :--- | :--- | | Revenue | $161 million | -2% | | RevPAR | $180 | +19% | | Occupancy Rate | 85% | +3pp | | Bookable Nights | 897,000 | -18% | | Net Income | $31 million | +128% | | Adjusted EBITDA | $(20) million | +51% | | Adjusted Free Cash Flow | $(26) million | +30% | | Live Units (as of Dec 31) | ~9,900 | N/A | - The significant increase in **Net Income to $31 million** was primarily driven by a **$(92) million change** in the fair value of a forward contract related to a preferred stock transaction[6](index=6&type=chunk) [Full Year 2024 Financial Highlights](index=1&type=section&id=Full%20Year%202024%20Financial%20Highlights) For the full year 2024, Sonder reported a 3% increase in revenue to $621 million, supported by a 5% rise in RevPAR to $159. The company demonstrated improved profitability, narrowing its Net Loss by 24% to $224 million. This result includes significant non-cash items such as a $93 million gain from lease adjustments, an $84 million loss on preferred stock issuance, and a $29 million change in the fair value of a forward contract. Adjusted EBITDA and Adjusted Free Cash Flow also showed substantial year-over-year improvements Full Year 2024 Key Financial Metrics (vs. FY 2023) | Metric | FY 2024 | YoY Change | | :--- | :--- | :--- | | Revenue | $621 million | +3% | | RevPAR | $159 | +5% | | Net Loss | $(224) million | +24% (improvement) | | Adjusted EBITDA | $(105) million | +38% (improvement) | | Adjusted Free Cash Flow | $(90) million | +25% (improvement) | | Cash Used in Operating Activities | $129 million | +17% (increase in use) | - The full-year **Net Loss of $224 million** was impacted by several significant items, including a **$93 million gain** on lease adjustments, an **$84 million loss** on preferred stock issuance, and a **$29 million change** in the fair value of a forward contract[6](index=6&type=chunk) [Strategic and Operational Updates](index=1&type=section&id=Strategic%20and%20Operational%20Updates) [Long-Term Strategic Licensing Agreement with Marriott International](index=1&type=section&id=Long-Term%20Strategic%20Licensing%20Agreement%20with%20Marriott%20International) Sonder has entered into a long-term strategic licensing agreement with Marriott International. The integration was completed in Q2 2025, making all Sonder properties available for booking on Marriott's digital platforms, including Marriott.com and the Marriott Bonvoy® app, under the new 'Sonder by Marriott Bonvoy' collection. This partnership also allows Sonder properties to participate in the Marriott Bonvoy® travel program - Sonder entered into a **long-term strategic licensing agreement** with Marriott in August 2024[4](index=4&type=chunk) - As of **June 2025**, all Sonder properties are **fully integrated** and bookable on Marriott's digital channels and participate in the **Marriott Bonvoy® travel platform**[4](index=4&type=chunk) [Portfolio Optimization Program](index=1&type=section&id=Portfolio%20Optimization%20Program) Initiated in November 2023, the portfolio optimization program aims to reduce losses from underperforming properties. As of December 31, 2024, Sonder had signed agreements to exit or reduce rent for approximately 110 buildings, totaling 4,500 units. Of these, finalized exit agreements were in place for 85 buildings (3,300 units), with the full exit of these properties completed by June 30, 2025 - The program targets **mitigating losses** from underperforming properties by **exiting or renegotiating rents**[5](index=5&type=chunk) - By the end of 2024, agreements were signed for **~110 buildings (4,500 units)**[5](index=5&type=chunk) - As of **June 30, 2025**, the company had completed the exit of all **85 buildings (3,300 units)** with finalized exit agreements[7](index=7&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2024, Sonder's total assets stood at $1.14 billion, a decrease from $1.52 billion at the end of 2023, largely driven by a reduction in operating lease right-of-use assets. Total liabilities also decreased to $1.57 billion from $1.90 billion. The company's cash position (including restricted cash) declined to $72.1 million from $136.5 million year-over-year, while long-term debt increased significantly to $217.2 million Selected Balance Sheet Data (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total cash, cash equivalents and restricted cash | $72,054 | $136,497 | | Total current assets | $99,846 | $161,207 | | Total assets | $1,137,177 | $1,521,267 | | Total current liabilities | $338,547 | $506,236 | | Total liabilities | $1,573,065 | $1,897,968 | | Total stockholders' deficit | $(598,795) | $(376,701) | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the year ended December 31, 2024, Sonder's revenue increased to $621.3 million from $602.1 million in 2023. The company significantly reduced its loss from operations to $182.6 million from $278.0 million in the prior year, aided by lower operating expenses and impairment losses. The net loss for the year improved to $224.1 million, or $(20.69) per share, compared to a net loss of $295.7 million, or $(27.04) per share, in 2023 Selected Statement of Operations Data (in thousands) | Account | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Revenue | $621,272 | $602,066 | | Total costs and operating expenses | $803,889 | $880,108 | | Loss from operations | $(182,617) | $(278,042) | | Net loss | $(224,087) | $(295,668) | | Basic and diluted net loss per common share | $(20.69) | $(27.04) | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the full year 2024, net cash used in operating activities increased to $129.2 million from $110.9 million in 2023. Investing activities provided $5.7 million in cash, a reversal from a $12.4 million use of cash in the prior year, mainly due to proceeds from a Key Money investment. Financing activities provided $59.9 million, driven by proceeds from preferred stock and debt issuance. Overall, the company's cash, cash equivalents, and restricted cash decreased by $64.4 million during the year Consolidated Cash Flow Data (in thousands) | Cash Flow Category | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(129,222) | $(110,904) | | Net cash provided by (used in) investing activities | $5,729 | $(12,362) | | Net cash provided by (used in) financing activities | $59,851 | $(32,232) | | Net change in cash, cash equivalents, and restricted cash | $(64,443) | $(152,689) | | Cash, cash equivalents, and restricted cash at end of year | $72,054 | $136,497 | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) [Reconciliation of Non-GAAP Financial Measures](index=7&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) The company provides reconciliations for its key non-GAAP metrics, showing significant year-over-year improvements. Adjusted Free Cash Flow improved by 25% to $(89.5) million, Adjusted EBITDA improved by 38% to $(105.5) million, and Adjusted EBITDAR improved by 30% to $196.1 million for the full year 2024. These figures adjust for items like stock-based compensation, impairment losses, and non-recurring fees to provide a clearer view of core operating performance [Adjusted Free Cash Flow (FCF) Reconciliation](index=7&type=section&id=Adjusted%20Free%20Cash%20Flow%20(FCF)%20Reconciliation) Adjusted Free Cash Flow for FY 2024 was $(89.5) million, a 25% improvement from $(119.6) million in FY 2023. The calculation starts with cash used in operating activities and adjusts for investing activities and specific non-recurring items such as a Key Money investment, professional fees, and restructuring costs Adjusted FCF Reconciliation (in thousands) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Cash used in operating activities | $(129,222) | $(110,904) | | Adjusted FCF | $(89,513) | $(119,601) | [Adjusted EBITDA Reconciliation](index=7&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for FY 2024 improved by 38% to $(105.5) million from $(169.4) million in FY 2023. The reconciliation from Net Loss adjusts for interest, taxes, depreciation, stock-based compensation, lease adjustment gains, impairment losses, and other non-recurring charges Adjusted EBITDA Reconciliation (in thousands) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net loss | $(224,087) | $(295,668) | | Adjusted EBITDA | $(105,483) | $(169,412) | [Adjusted EBITDAR Reconciliation](index=8&type=section&id=Adjusted%20EBITDAR%20Reconciliation) Adjusted EBITDAR, which further adjusts Adjusted EBITDA for operating lease rent charges, increased by 30% to $196.1 million for FY 2024, up from $150.8 million in FY 2023. This metric is used to assess operating performance independent of operating lease costs Adjusted EBITDAR Reconciliation (in thousands) | Metric | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | | :--- | :--- | :--- | | Adjusted EBITDA | $(105,483) | $(169,412) | | Adjusted EBITDAR | $196,095 | $150,840 | [Definitions of Key Metrics and Non-GAAP Measures](index=8&type=section&id=Definitions%20of%20Key%20Metrics%20and%20Non-GAAP%20Measures) This section provides definitions for key operational and non-GAAP financial metrics used by Sonder. It clarifies terms like RevPAR, Live Units, and Total Portfolio, and explains the composition and management's rationale for using Adjusted EBITDA, Adjusted EBITDAR, and Adjusted Free Cash Flow to measure performance and liquidity [Key Metrics Definitions](index=8&type=section&id=Key%20Metrics%20Definitions) The report defines key operational metrics: RevPAR (Revenue Per Available Room) is the average revenue per available night. Live Units are units available for booking. Total Portfolio includes both Live Units and Contracted Units not yet available for booking - **RevPAR (Revenue Per Available Room):** Represents the average revenue earned per available night, calculated by dividing revenue by Bookable Nights[22](index=22&type=chunk) - **Live Units & Total Portfolio:** Live Units are those available for guest booking, while Total Portfolio includes both Live Units and contracted units not yet open[23](index=23&type=chunk) [Non-GAAP Measures Definitions](index=8&type=section&id=Non-GAAP%20Measures%20Definitions) Sonder defines its primary non-GAAP measures as follows: Adjusted EBITDA is Net Loss adjusted for interest, taxes, depreciation, and other specific items to evaluate core operating performance. Adjusted EBITDAR further removes operating lease rent charges from Adjusted EBITDA. Adjusted Free Cash Flow is a liquidity measure derived from operating and investing cash flows, excluding certain non-recurring items, and is central to the company's Cash Flow Positive Plan - **Adjusted EBITDA:** Defined as net income (loss) adjusted for interest, taxes, depreciation, amortization, and other specified items to measure core operating performance[24](index=24&type=chunk) - **Adjusted EBITDAR:** Defined as Adjusted EBITDA further adjusted for operating lease related rent charges to assess performance independent of lease costs[25](index=25&type=chunk) - **Adjusted Free Cash Flow (Adjusted FCF):** A primary liquidity measure defined as cash from operating and investing activities, excluding the impact of specific items like the Key Money investment and restructuring charges[26](index=26&type=chunk)

[Sonder Holdings Inc. Third Quarter 2024 Financial Results](index=1&type=section&id=Sonder%20Holdings%20Inc.%20Third%20Quarter%202024%20Financial%20Results) [Third Quarter 2024 Financial Highlights](index=1&type=section&id=Third%20Quarter%202024%20Financial%20Highlights) The company reported a 14% YoY RevPAR increase and improved Adjusted EBITDA, though Net Loss widened due to non-cash charges - CEO Francis Davidson highlighted pivotal progress in Q3, citing a **14% year-over-year RevPAR growth**, a **69% improvement in Adjusted EBITDA**, and a **33% improvement in Adjusted Free Cash Flow**, driven by portfolio and cost optimization efforts[3](index=3&type=chunk) Q3 2024 Key Financial & Operational Metrics (YoY) | Metric | Q3 2024 | YoY Change | | :--- | :--- | :--- | | Revenue | $162 million | +1% | | RevPAR | $176 | +14% | | Occupancy Rate | 85% | +2pp | | Bookable Nights | 922,000 | -12% | | Net Loss | $(179) million | +211% | | Adjusted EBITDA | $(12) million | +69% (Improvement) | | Adjusted Free Cash Flow | $(11) million | +33% (Improvement) | | Total Cash & Equivalents | $76 million | N/A | | Live Units | ~10,100 | N/A | [Operational and Strategic Updates](index=1&type=section&id=Operational%20and%20Strategic%20Updates) The company advanced its portfolio optimization, Marriott partnership, balance sheet strengthening, and European expansion [Portfolio Optimization Program](index=1&type=section&id=Portfolio%20Optimization%20Program) The company is actively reducing losses from underperforming properties by exiting a targeted set of buildings - As of September 30, 2024, the company has exited approximately **70 buildings (2,800 units)** as part of its program to mitigate losses from underperforming properties[4](index=4&type=chunk) - The optimization program initially targeted approximately **80 buildings, or 3,200 units**, with finalized exit agreements as of June 10, 2024[4](index=4&type=chunk) [Long-Term Strategic Licensing Agreement with Marriott International](index=1&type=section&id=Long-Term%20Strategic%20Licensing%20Agreement%20with%20Marriott%20International) Sonder is integrating its properties into Marriott's digital channels, with the first phase completed in October 2024 - Sonder's properties will be integrated with Marriott's digital channels, including Marriott.com and the Marriott Bonvoy app, as a new collection called **"Sonder by Marriott Bonvoy"**[5](index=5&type=chunk) - The **first phase of integration was completed in October 2024**, giving Marriott Bonvoy members early access to earn and redeem points on Sonder.com[8](index=8&type=chunk) - **Full integration** with Marriott's digital channels is anticipated to occur in **2025**[8](index=8&type=chunk) [Strengthened Balance Sheet](index=2&type=section&id=Strengthened%20Balance%20Sheet) The company enhanced its liquidity profile by approximately $146 million to support long-term growth and Marriott integration - Sonder enhanced its liquidity profile by approximately **$146 million** to support long-term growth and integration efforts with Marriott[9](index=9&type=chunk) - The company now has access to a majority of this additional liquidity and expects to access the remaining **$12.5 million in 2025**[9](index=9&type=chunk) [Property Expansion in Europe](index=2&type=section&id=Property%20Expansion%20in%20Europe) Sonder expanded its European portfolio in Q3 2024 by opening three new properties in Madrid, Milan, and Paris - New properties opened in Q3 2024 include The Sofia in Madrid (36 units), The Manzoni in Milan (38 units), and The Yvette in Paris (61 keys)[16](index=16&type=chunk) [Executive Leadership & Board of Directors Appointments](index=2&type=section&id=Executive%20Leadership%20&%20Board%20of%20Directors%20Appointments) Sonder appointed a new CFO and a new Board member, and also transitioned to an independent Board Chairperson - **Michael Hughes**, formerly CFO of Spirit Realty Capital, joined Sonder as Chief Financial Officer[10](index=10&type=chunk) - **Erin Wallace**, with extensive experience at The Walt Disney Company and Great Wolf Resorts, was appointed to the Board of Directors[11](index=11&type=chunk) - The company enhanced corporate governance by appointing Lead Independent Director **Janice Sears as Chairperson of the Board**[12](index=12&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=3&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section reconciles non-GAAP financial measures such as Adjusted EBITDA to their comparable GAAP counterparts [Reconciliation of Cash Used in Operating Activities to Adjusted Free Cash Flow](index=3&type=section&id=Reconciliation%20of%20Cash%20Used%20in%20Operating%20Activities%20to%20Adjusted%20Free%20Cash%20Flow) The company reconciled its GAAP Cash Used in Operating Activities of $(17.4) million to its non-GAAP Adjusted Free Cash Flow of $(10.7) million for Q3 2024 Adjusted Free Cash Flow Reconciliation (in thousands) | | Three months ended September 30, | | :--- | :--- | :--- | | | **2024** | **2023** | | Cash used in operating activities | $(17,364) | $(12,988) | | Cash provided by (used in) investing activities | 114 | (3,086) | | **Adjusted FCF** | **$(10,735)** | **$(16,074)** | [Reconciliation of Net Loss to Adjusted EBITDA](index=3&type=section&id=Reconciliation%20of%20Net%20Loss%20to%20Adjusted%20EBITDA) Sonder reconciled its GAAP Net Loss of $(179.4) million to a non-GAAP Adjusted EBITDA of $(12.4) million for Q3 2024 Adjusted EBITDA Reconciliation (in thousands) | | Three months ended September 30, | | :--- | :--- | :--- | | | **2024** | **2023** | | Net loss | $(179,391) | $(57,630) | | Adjustments (Interest, Taxes, D&A, etc.) | 166,994 | 4,943 | | **Adjusted EBITDA** | **$(12,397)** | **$(39,366)** | [Reconciliation of Adjusted EBITDA to Adjusted EBITDAR](index=3&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%20to%20Adjusted%20EBITDAR) The company reconciled its Adjusted EBITDA of $(12.4) million to an Adjusted EBITDAR of $60.2 million for Q3 2024 Adjusted EBITDAR Reconciliation (in thousands) | | Three months ended September 30, | | :--- | :--- | :--- | | | **2024** | **2023** | | Adjusted EBITDA | $(12,397) | $(39,366) | | Operating lease related rent charges | 72,614 | 83,845 | | **Adjusted EBITDAR** | **$60,217** | **$44,479** | [Definitions](index=4&type=section&id=Definitions) This section defines key performance indicators and non-GAAP financial measures used to evaluate the company's performance [Key Performance Indicators (KPIs)](index=4&type=section&id=Key%20Performance%20Indicators%20(KPIs)) The report defines key operational metrics including RevPAR, Live Units, and Total Portfolio - **RevPAR (Revenue Per Available Room):** Represents the average revenue earned per available night, calculated by dividing revenue by Bookable Nights[20](index=20&type=chunk) - **Live Units & Total Portfolio:** Live Units are those available for guest booking, while Total Portfolio includes both Live Units and Contracted Units that are not yet available for booking[21](index=21&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) The company defines its non-GAAP measures to assess core operating performance and progress towards sustainable cash flow - **Adjusted EBITDA:** Defined as net income (loss) adjusted for interest, taxes, depreciation, amortization, and other specified items to evaluate core operating performance[22](index=22&type=chunk) - **Adjusted EBITDAR:** Defined as Adjusted EBITDA further adjusted for operating lease-related rent charges to assess performance independent of lease obligations[23](index=23&type=chunk) - **Adjusted Free Cash Flow (Adj. FCF):** Represents cash from operating and investing activities, excluding the impact of specific non-operational charges like lease terminations and restructuring, to measure liquidity[24](index=24&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This section cautions that the press release includes forward-looking statements that are not guarantees of future performance - The press release contains forward-looking statements regarding financial performance, portfolio optimization, and the Marriott integration, which are not guarantees of future performance[25](index=25&type=chunk) - Readers are advised that actual results could differ materially and should refer to the 'Risk Factors' section in the company's SEC filings for a full list of risks and uncertainties[25](index=25&type=chunk)

PART I [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Q3 2024 financial statements show widened net loss, decreased cash, increased stockholders' deficit, and going concern doubts [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of September 30, 2024, reflects a significant decrease in cash and a widened stockholders' deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $26,957 | $95,763 | | Total current assets | $106,121 | $161,207 | | Total assets | $1,218,036 | $1,521,267 | | Total current liabilities | $473,281 | $506,236 | | Total liabilities | $1,754,978 | $1,897,968 | | Total stockholders' deficit | $(596,467) | $(376,701) | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) Q3 2024 operations show slightly increased revenue but a significantly widened net loss due to non-operating charges Q3 Statement of Operations Highlights (in thousands) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Revenue | $162,114 | $160,896 | | Loss from operations | $(33,923) | $(50,841) | | Loss on preferred stock issuance | $59,490 | $0 | | Change in fair value of forward contract | $86,570 | $0 | | Net loss | $(179,391) | $(57,630) | | Basic and diluted net loss per common share | $(17.82) | $(5.26) | Nine Months Statement of Operations Highlights (in thousands) | Metric | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | Revenue | $460,194 | $437,802 | | Loss from operations | $(133,283) | $(174,897) | | Lease adjustment (gains), net | $(95,579) | $(8,576) | | Net loss | $(197,131) | $(183,679) | | Basic and diluted net loss per common share | $(19.85) | $(16.84) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Nine-month cash flow shows increased cash used in operations, decreased investing, and increased financing, resulting in a net cash decrease Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(90,451) | $(72,537) | | Net cash used in investing activities | $(2,095) | $(12,436) | | Net cash provided by financing activities | $32,287 | $2,758 | | Net change in cash, cash equivalents, and restricted cash | $(60,598) | $(81,953) | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail going concern doubt, Marriott agreement, preferred stock impacts, portfolio optimization gains, and legal proceedings - Management concluded **substantial doubt** about the Company's ability to continue as a going concern for at least one year[32](index=32&type=chunk) - Mitigation plans include new financing (e.g., **$15 million** Marriott Agreement, **~$28.6 million** Series A Preferred Stock second tranche), operational improvements, and cost-cutting[33](index=33&type=chunk) - On August 13, 2024, the company entered a license agreement with Marriott, integrating Sonder properties into the "Sonder by Marriott Bonvoy" system[37](index=37&type=chunk) - In August 2024, agreements were made to sell **$43.3 million** in Series A Preferred Stock in two tranches, with the first **$14.7 million** tranche closing in August[93](index=93&type=chunk) - The company recognized a **$58.2 million** loss on preferred stock issuance and an **$86.6 million** change in fair value of a forward contract liability in Q3 2024[94](index=94&type=chunk)[95](index=95&type=chunk) - The 2024 portfolio optimization initiative generated **$95.6 million** in early lease termination gains for the nine months ended September 30, 2024[110](index=110&type=chunk) - The company is involved in a putative securities class action lawsuit alleging false and misleading statements from March 2023 to March 2024[143](index=143&type=chunk) - A February 2024 reduction in force affected **17%** of the corporate workforce, incurring approximately **$3 million** in one-time restructuring costs[156](index=156&type=chunk)[157](index=157&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management focuses on positive Adjusted FCF through portfolio optimization, Marriott agreement, and new financing, despite going concern doubts - The company's primary focus is achieving sustainable positive **Adjusted Free Cash Flow (FCF)** via its "Cash Flow Positive Plan"[184](index=184&type=chunk) - As of June 10, 2024, the portfolio optimization program secured agreements to exit or reduce rent for approximately **105 buildings (4,300 units)**[178](index=178&type=chunk) - Management reiterates **substantial doubt** about the Company's ability to continue as a going concern, with existing cash potentially insufficient for the next 12 months[259](index=259&type=chunk)[263](index=263&type=chunk) [Key Business Metrics](index=39&type=section&id=Key%20Business%20Metrics) Q3 2024 Live Units decreased due to optimization, but RevPAR, ADR, and occupancy rates significantly improved Key Business Metrics (Q3 2024 vs Q3 2023) | Metric | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | Live Units (end of period) | 10,100 | 11,800 | (14.4)% | | Bookable Nights | 922,000 | 1,048,000 | (12.0)% | | RevPAR | $176 | $154 | 14.3% | | ADR | $207 | $185 | 11.9% | | Occupancy rate | 84.9% | 82.8% | 2.5% | [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Q3 2024 revenue slightly increased, operating loss narrowed, but surging non-operating expenses led to a larger net loss - Q3 2024 revenue increased **0.8%** year-over-year, driven by a **14.3%** RevPAR increase, partially offset by a **12.0%** decrease in Bookable Nights due to portfolio optimization[204](index=204&type=chunk) - Q3 2024 cost of revenue decreased **10.0%** year-over-year, primarily due to a **$10.9 million** reduction in rent expense from portfolio optimization[205](index=205&type=chunk) - For the nine months ended September 30, 2024, lease adjustment gains significantly increased to **$95.6 million** from **$8.6 million** due to portfolio optimization lease terminations[234](index=234&type=chunk)[236](index=236&type=chunk) [Non-GAAP Financial Measures](index=50&type=section&id=Non-GAAP%20Financial%20Measures) Nine-month non-GAAP metrics show improved Adjusted FCF, narrowed Adjusted EBITDA loss, and increased Adjusted EBITDAR Adjusted FCF Reconciliation (Nine Months Ended Sep 30, in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Cash used in operating activities | $(90,451) | $(72,537) | | Cash used in investing activities | $(2,095) | $(12,436) | | **FCF** | **$(92,546)** | **$(84,973)** | | Adjustments (lease termination, restructuring, etc.) | $28,600 | $2,150 | | **Adjusted FCF** | **$(63,946)** | **$(82,823)** | Adjusted EBITDA (in thousands) | Period | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | **Adjusted EBITDA** | **$(12,397)** | **$(39,366)** | **$(85,176)** | **$(127,747)** | [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) Q3 2024 cash balance is **$27.0 million**; management expresses substantial doubt about 12-month liquidity, relying on new financing and strategic initiatives - As of September 30, 2024, the company's cash balance was **$27.0 million**[261](index=261&type=chunk) - Management secured financing providing access to approximately **$139 million** in additional liquidity, including **~$43 million** from Series A Preferred Stock and **~$83 million** from noteholder agreements[260](index=260&type=chunk) - Future cash obligations as of September 30, 2024, include **$1.0 million** in short-term debt, **$1.1 billion** in long-term operating lease obligations, and **$760.0 million** for leases not yet commenced[266](index=266&type=chunk)[267](index=267&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk disclosures from the Annual Report on Form 10-K - There have been no material changes in the company's market risk from disclosures in the Annual Report[281](index=281&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to persistent material weaknesses in internal control over financial reporting - Disclosure controls and procedures were concluded to be ineffective by principal officers as of the period end[282](index=282&type=chunk) - Material weaknesses in internal control over financial reporting persist in Leases, Control Activities and Environment, and Asset Impairment[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk)[287](index=287&type=chunk) PART II [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 12 of the financial statements - Information regarding legal proceedings is incorporated by reference from Note 12, "Commitments and Contingencies"[292](index=292&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have been reported from the Annual Report on Form 10-K - There have been no material changes to the risk factors from those provided in the Annual Report[292](index=292&type=chunk) [Other Items (Items 2, 3, 4, 5, 6)](index=54&type=section&id=Other%20Items%20%28Items%202%2C%203%2C%204%2C%205%2C%206%29) The company reports no unregistered equity sales, senior security defaults, mine safety disclosures, or Rule 10b5-1 trading arrangement changes - The company reports "None" for Unregistered Sales of Equity Securities (Item 2) and Defaults Upon Senior Securities (Item 3)[293](index=293&type=chunk)[294](index=294&type=chunk) - Mine Safety Disclosures (Item 4) are not applicable[295](index=295&type=chunk)

Core Points - Sonder Holdings Inc. has appointed Erin Wallace to its Board of Directors and transitioned to a structure with an independent Chairperson, Janice Sears, to enhance corporate governance [1][3] - Janice Sears expressed enthusiasm about Erin Wallace's expertise in hospitality and operations, which will support Sonder's transformation and growth [3] - Erin Wallace has over 30 years of experience in operations, primarily at The Walt Disney Company, and has held executive roles at Great Wolf Resorts and The Learning Care Group [2] Company Overview - Sonder is a global brand offering premium, design-forward apartments and boutique hotels, launched in 2014 [4] - The company operates in over 40 markets across ten countries and three continents, providing tech-enabled services and accommodations for modern travelers [4] - The Sonder app allows guests to manage their stay with self-service features and 24/7 support [4]

Core Insights - Sonder Holdings Inc. has completed a convertible preferred equity transaction, raising approximately $43 million, which will enhance its liquidity profile by about $146 million to support long-term profitable growth [1][2][3] Financial Developments - The company has met all closing conditions for the preferred equity transaction, with $14.7 million purchased on August 13, 2024, and $12.8 million on November 7, 2024, with the remainder expected to be purchased soon [1] - The additional liquidity will support integration efforts under a strategic licensing agreement with Marriott International [2] Executive Leadership Changes - Dominique Bourgault, CFO, and Katherine Potter, Chief Legal and Administrative Officer, will step down from their positions, with a search process underway for successors [4] - Adam Bowen, Chief Accounting Officer, will also depart the company [4] Compliance and Reporting - Sonder is now current on all financial reporting following the restatement of its 2022 and 2023 financial information and is in full compliance with Nasdaq requirements [5]

Portfolio and Operations - As of March 31, 2024, Sonder had approximately 11,900 Live Units, representing a 14.4% increase from 10,400 units as of March 31, 2023[182]. - The total portfolio decreased by 15.9% to 15,300 units from 18,200 units, indicating a strategic focus on optimizing the property portfolio[182]. - A portfolio optimization program was implemented in November 2023, resulting in agreements to exit or reduce rent for approximately 4,300 units across 105 buildings[170]. - The five largest cities accounted for approximately 34.5% of Live Units, indicating a concentrated market presence[185]. Financial Performance - Revenue for the three months ended March 31, 2024, was $133,479,000, representing an 11.7% increase from $119,503,000 in the same period of 2023[192]. - Cost of revenue (excluding depreciation and amortization) increased to $100,363,000, a 9.3% rise from $91,813,000 year-over-year[194]. - Total operating expenses were $201,140,000, slightly down by 0.4% from $201,973,000 in the previous year[194]. - Loss from operations improved to $(67,661,000), a reduction from $(82,470,000) in the prior year, reflecting a 17.9% decrease in operational losses[194]. - Net loss for the period was $(50,487,000), compared to $(81,865,000) in the same quarter of 2023, indicating a 38.3% improvement[194]. - Adjusted EBITDA for the three months ended March 31, 2024, was $(56.1) million, compared to $(63.9) million for the same period in 2023, indicating a reduction in losses[217]. Cash Flow and Financing - The company aims to achieve sustainable positive free cash flow (FCF), with adjusted FCF improving to $(28.5) million for Q1 2024, a $12.1 million improvement from $(40.3) million in Q1 2023[173]. - Free Cash Flow (FCF) adjusted was $(28,519,000), showing a 29.8% improvement compared to $(40,597,000) in the previous year[210]. - Cash balance as of March 31, 2024, was $40.8 million, held for working capital purposes[222]. - The company expects to achieve annualized run-rate free cash flow improvements of over $40 million from lease renegotiations affecting approximately 4,300 units[221]. - Total debt obligations as of March 31, 2024, amounted to $196.1 million, with $1 million classified as short-term[228]. - The company has incurred net cash used in operating activities of $40.3 million for the three months ended March 31, 2024, compared to $35.3 million for the same period in 2023[233]. - The company has received $16 million in financing from existing noteholders during June and July 2024[221]. Cost Management - A reduction in force plan was announced on February 20, 2024, affecting 106 corporate roles (17% of the workforce), expected to yield $11 million in annualized cost savings[171]. - Operating lease related rent charges for the three months ended March 31, 2024, were $82.6 million, up from $75.8 million in the same period in 2023[217]. - Interest expense, net increased by 28.3% to $7,323,000 from $5,707,000 year-over-year[200]. - The provision for income taxes rose significantly to $187,000, a 233.9% increase from $56,000 in the prior year[204]. Internal Controls and Legal Matters - The company continues to face material weaknesses in internal control over financial reporting, particularly related to lease agreements and asset impairments[246][249]. - The Broad Street Landlord is seeking $36.9 million in alleged damages related to a breach of lease, with a trial date yet to be set[253]. Strategic Initiatives - Direct revenue as a percentage of total revenue stabilized above 40%, reaching 43.6% for the three months ended March 31, 2024[179]. - The strategic licensing agreement with Marriott announced in summer 2024 is expected to enhance technology integration and guest experience[165]. - The company is focused on achieving sustainable positive FCF as part of its Cash Flow Positive Plan[208]. - Foreign exchange fluctuations negatively impacted cash, decreasing the total cash balance by $0.3 million in Q1 2024[238].

Core Viewpoint - Sonder Holdings Inc. is facing potential delisting from Nasdaq due to delinquent filings of Forms 10-Q for the periods ended March 31 and June 30, 2024, and must appeal by October 8, 2024, to avoid suspension of trading [1][2] Group 1: Company Compliance and Filings - The company has received a notification from Nasdaq regarding noncompliance with Listing Rule 5250(c)(1) due to delinquent filings [1] - Sonder has filed its 2023 Form 10-K on September 27, 2024, and is now compliant regarding that report [1] - The company intends to file the Forms 10-Q within the next 30-45 days [2] Group 2: Appeal and Hearing Process - On October 2, 2024, the company submitted an appeal to Nasdaq requesting a hearing to present its compliance plan [2] - The appeal automatically suspends any potential delisting until at least October 23, 2024 [2] - A decision from the Hearings Panel regarding the company's request for continued listing will be communicated by October 18, 2024 [2] Group 3: Company Overview - Sonder is a global brand offering premium, design-forward apartments and boutique hotels, launched in 2014 [3] - The company operates in over 40 markets across ten countries and three continents, providing tech-enabled services for modern travelers [3]

Core Points - Sonder Holdings Inc. announced that approximately 57% of its outstanding shares voted to approve all proposals at a Special Meeting of Shareholders held on September 30, 2024 [1] - A consortium of investors committed to purchase approximately $43 million of a newly designated series of convertible preferred equity, with $14.7 million already purchased [2] - The approval of proposals is seen as a significant milestone for strengthening the company's balance sheet and positioning for long-term growth, particularly following a strategic licensing agreement with Marriott [3] Company Overview - Sonder is a leading global brand of premium, design-forward apartments and boutique hotels, launched in 2014, serving modern travelers [4] - The company operates in over 40 markets across ten countries and three continents, offering tech-enabled services and self-service features through the Sonder app [4]