Sonder Holdings Inc. Q4 FY2022 earnings call

• Focused on generating positive free cash flow, with Q4 free cash flow improving to negative $30 million vs. negative $39 million in the previous quarter and negative $62 million in Q1 2022.
• 2022 revenue up approximately 100% year-over-year. RevPAR up over 30% year-over-year.
• Key focus areas for 2023 include expanding corporate business, with $70 million in booked corporate sales in 2022 (5x growth from 2021), and continuing RevPAR initiatives.
• Reduced overhead expense base by cutting ~100 corporate roles (40% of corporate workforce), resulting in ~$10 million in annualized cost savings.
• Progress on cash flow positive plan, with focus on reaching positive free cash flow in 2023.

In the fourth quarter, Sonder generated $135 million in revenue, a 56% increase year-over-year. Cash contribution margin, a unit economic metric, was 24% in Q4, up from 22% in the previous quarter and 10% in the same quarter of 2021. Live units grew 28% year-over-year in Q4 to over 9,700. RevPAR in 2022 was up over 30% year-over-year. Fourth quarter revenue was driven by a 39% increase in bookable nights and 11% RevPAR growth. Occupancy in Q4 was 83%, up 1,400 basis points year-over-year.

• For Q1 2023, expected revenue >$110 million (37% year-over-year growth).
• Expected free cash flow >negative $45 million before restructuring costs in Q1 2023.
• Guidance based on internal data and third-party forecasters, not contemplating significant demand slowdown.

• Development cost uncertainty.
• Augmented risk around financing, leading to exclusion of some contracted units with financing contingencies.
• Macro uncertainty affecting cost structure and signings.

Q: Can we talk about the outlook for 1Q and RevPAR?

A: Guidance is for revenue >$110 million in Q1 (37% YOY growth), with Q1 typically being seasonally weakest. Comps for Q1 are tougher due to past COVID impacts.

Q: Any benefit from Dubai World Cup in 4Q or Super Bowl in 1Q?

A: No significant aggregate impact from one-time events like the World Cup, as comparison periods had other drivers.

Q: Thoughts on RevPAR resilience and mix shift?

A: Sonder's value proposition as an affordable option with quality experience could hold in softer demand. Relative positioning vs. peer group is considered.

Q: How to think about corporate travel in 2023?

A: $70 million in book-to-corporate sales in 2022 (5x growth from 2021), with progress continuing, but business travel demand uncertainty exists.