Sonder Holdings Inc. Q1 FY2023 earnings call

• Francis welcomed new CFO Dom Bourgault and discussed Q1 results, noting revenue growth and free cash flow improvement. - Highlighted RevPAR initiatives: expanding corporate business into new verticals, improving pricing optimization with new algorithms, rolling out Flex cancellation policy on VRBO with positive RevPAR impact, testing and implementing new commission model on VRBO. - Mentioned live units growth, surpassing 10,000 live units, and continued focus on converting contracted units to live units. - Discussed merchandising strategy with reimagined art direction and photography leading to conversion uplift, with plans to upgrade photography across more live units.

Revenue grew by 50% year-over-year to $121 million in the first quarter. Live units grew by 35% year-over-year, reaching approximately 10,400 live units. RevPAR in the first quarter was $134, up 15% year-over-year with ADR growing 4% to $167. Occupancy rate was 80% in Q1, up 700 basis points year-over-year but down 300 basis points sequentially. Cash contribution margin was 12.5% versus 12.9% in Q1 of 2022. The revenue contribution from different segments isn't explicitly broken down beyond the overall revenue figure and segment-specific initiatives discussed.

• For Q2 2023, expect revenue between $155 million and $165 million and free cash flow excluding one-time restructuring costs between negative $30 million and negative $20 million. - For the second half of 2023, expect revenue between $345 million and $375 million. - Lowered RevPAR assumptions for the balance of 2023 due to uncertain macro conditions, and while aiming for positive free cash flow, it's unlikely under the lower RevPAR scenario.

• Broader macroeconomic environment affecting capital markets and share price. - Capital markets challenges, especially for commercial real estate financing which impacts unit growth from contracted to live units. - Impact of SVB failure leading to collateralization of new lines of credit and amendments to financial covenant requirements, affecting cash position.

Q: Just as we think about adding units to the portfolio, and then live units is -- should we kind of expect live units to outpace kind of net adds in the total portfolio through the rest of the year? And then could you maybe touch on how you feel about your cost structure as you try to reach free cash flow positivity in the face of kind of macro environment?

A: Francis Davidson said they expect majority live unit growth from contracted units, focusing on converting signed deals to live units. Dom Bourgault mentioned continuing to improve cash contribution margin, leveraging overhead cost decline, controlling pre-opening costs, and optimizing direct costs.

Q: Could you maybe speak to how we should be thinking about your RevPAR throughout the rest of the year? And then on cash levels could you give us a sense on how we should be thinking about trough cash level?

A: Francis Davidson said they use 30-45 day booking visibility and take a cautious approach due to macro uncertainties when planning RevPAR for the rest of 2023. Dom Bourgault said they won't comment explicitly on cash trough but pointed to guidance on reducing cash burn and the trajectory of burn to understand liquidity position