Sonder(SOND) - 2024 Q4 - Annual Results

Sonder Holdings Inc. Third Quarter 2024 Financial Results Third Quarter 2024 Financial Highlights 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] 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 The company advanced its portfolio optimization, Marriott partnership, balance sheet strengthening, and European expansion Portfolio Optimization Program 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] - The optimization program initially targeted approximately 80 buildings, or 3,200 units, with finalized exit agreements as of June 10, 2024[4] Long-Term Strategic Licensing Agreement with Marriott International 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] - 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] - Full integration with Marriott's digital channels is anticipated to occur in 2025[8] Strengthened Balance Sheet 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] - The company now has access to a majority of this additional liquidity and expects to access the remaining $12.5 million in 2025[9] Property Expansion in Europe 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] Executive Leadership & Board of Directors Appointments 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] - Erin Wallace, with extensive experience at The Walt Disney Company and Great Wolf Resorts, was appointed to the Board of Directors[11] - The company enhanced corporate governance by appointing Lead Independent Director Janice Sears as Chairperson of the Board[12] Reconciliation of Non-GAAP Financial Measures 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 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 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 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 This section defines key performance indicators and non-GAAP financial measures used to evaluate the company's performance Key Performance Indicators (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] - 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] Non-GAAP Financial Measures 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] - Adjusted EBITDAR: Defined as Adjusted EBITDA further adjusted for operating lease-related rent charges to assess performance independent of lease obligations[23] - 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] Forward-Looking Statements 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] - 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]