Sonder (SOND) 1 Mar 232022 Q4 Earnings call transcript

Good day and thank you for standing by, and welcome to Sonder's Fourth Quarter 2022 Financial Results. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Also be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Jon Charbonneau, Vice President, Head of Investor Relations. ahead. go Please

Good joining operator. financial and Thank gentlemen. Thank to afternoon, discuss for us XXXX Sonder's you you, ladies fourth results. quarter

Co-Founder Berry, on are me call and Davidson, CEO; Joining and Accounting Chief the Chris Officer. Francis today

additional section Full commentary in at of shareholder which our are XXXX on found management can details website quarter results be fourth the available our letter, of and our Investor investors.sonder.com. Relations

the strategies, to like the we you of those the following risks contain I'd cause that here. and statements and limited at and and Before discussion but Q&A session from may involve discussed financial actual forward-looking that remind end results call market this not start, to that results future materially uncertainties operating including to opportunities Sonder's differ

our The the to today. this risks in any based of forward-looking in Additional factors results your questions as those or in cause on found forward-looking including conference filings. be are current call could that Sonder's implied expectations actual expressed about SEC statements statements in responses from to differ of information discussions can

no developments assumes as otherwise to Sonder financial non-GAAP by whether revise discussion measures. required following Also contains or law. the except of result update as a them obligation new or

shareholder of our For letter and comparable financial posted presented to our non-GAAP measure this a see the to reconciliation Relations calculated A GAAP. in measures financial most website. please directly accordance Investor with

Sonder's Francis over call Davidson, Now CEO. to the and I'll turn Co-Founder

will you two joining Thank areas. Good you us today. and Jon. cover My remarks everyone, for afternoon, thank

of for and financial and our second, overview performance brief First, in a year. the XXXX; our areas quick key the focus quarter overview a of fourth

to a cash especially in accomplished strategy in we positive free flow. what by generating on company XXXX, material considering focus shift encouraged I'm midyear

and improved near we robust in same year contracted on leverage structure growth time, our the portfolio We costs and cost continue not have beyond. to units drive meaningfully XXXX business but in through mid-term. of help At to live scale and a expect still the further the to the

us level in half to property over We positive that flow also improvement model enabling saw cut our a path results cash free reaffirm free on cash in These we're in I believe performance, a of and to generating flow. the XXXX. course my conviction business meaningful burn

Now on fourth I'd provide to like the and more quarter details XXXX.

highlighted free quarter, Our the to previous cash of results negative fourth first $XX in million negative quarter XXXX. row were million $XX versus third the negative flow in by improvement quarter a in $XX million quarter the and of

improvement versus property reaching in throughout XX% the to which negative in fourth unit ago. and contribution year margin, level used XX% year we compared a the quarter. was the performance to fourth in measure And This quarter helped in margin FCF the quarter XX% cash the is significant metric, XX% a quarter drive last negative economic XX% first

in every and the course cash openings, capital-light enabling XXXX cost margins. In of cash cost XX% sequential up over over improved cut year-over-year, which the while margin which level quarter a in saw property drivers property our a we year. significant lowered including drove Together burn is our improvement and improvement structure contribution XXXX, FCF of RevPAR, with we to us in this high-quality improve

improve for economics can and speak that structure, cost versus ago XXXX we're see, ones the continuing continue we'll improvements overhead to meaningfully our our flow We against while shortly. demonstrates believe our this you business improved we've exited fundamentals further with better that positive unit executing about As strive a cash a and will including plan. that year to

[ph] revenue we over in approximately which the up on rate $X.X XXXX. annualized generated million of with proud performance also XXX% is an $XXX billion fourth our run top-line Moreover, I'm in revenue revenue XXXX year-over-year. basis, quarter exiting

quick included key a XXXX, other our travel XXXX provide focus business we to significant to amount starting things platforms areas which In our our expand of and corporate RevPAR corporate among continued accounts. on of Now for I'd a adding initiatives. strengthening with overview like position and GDS our

booked of approximately the This compared This Xx new in corporate sales continue particular to into we with growth $XX weekday a which to of translated million area in roughly business, will strong year expanding expect an still RevPAR in and upside. year XXXX. growth XXXX into segments industry bolster lot plan to within another corporate

pilot on to of and XX We're will which a this our merchandising strategy reimagined in units. over conversion represent bold properties art We're improvement rates elevated XX% we [indiscernible], in of our down this seen excited over largest live implement year with XX% also direction have XX properties. across which doubling drive over

June cash which Next, announced cash plan, than our from shifted positive hyper our previously focus to on flow we growth flow rapidly planned. X positive free more generating

thought instead we reminder, the and a was conditions shift to growth because strategy adapt focus but to As to this changed not shift of to have in environment. macro our opportunities, was a prudent it market changing lack due

our I'll XXXX. details results on but we'll guidance, free can meaningful Chris to progress note that let first quarter of you positive make cash on we've flow against focus our provide As quarter continued from reaching our fourth see in remains this plan.

uncertainty. cost evaluate also especially, We've our to given structure, macro ongoing continued

both annualized our XXX across we addition non-headcount approximately million savings expense to in reducing cost base our from in headcount which or anticipated approximately $XX roles workforce non-headcount to As corporate lead a corporate reductions. will spend XX% and decided spend result, savings, overhead to reduce of

packages are dignity and to done support and with system providing transition. best to We've other our colleagues continuation our support departing severance and including benefits care, compassion

around from risk financing. grew augmented planned And continue plan being flow year-over-year the with XX% live still to previously signing pace the has to units cost in positive contracted near-term by uncertainty time, Another cash contracted quarter same by driven At growth proactively driven component opening conversion live in reduce to development been units. units by fourth of strong our and primarily we the our units. see

we our numbers. it prudent result, was contracted to sequential which of a with exclude portfolio a contingencies units financing total felt As decline drove the number within

excluded majority expect contracted weren't in a in of we impact live or we've the for update progress go until XXXX units have vast to and for weeks. and XXXX. lot to even of limited year the search Separately, the in Importantly, this our an you to made we hope growth beyond, CFO, expected next coming

value mission of execution revolutionize to and and want belief continued choosing focus cash for closing, employees, shareholders. on to guests Sonder the post globe flow I our In our long-term to all for sustainable thank drive their hospitality. partners remains our the plan across for our and support of

update I'll Chief you our who Officer, on call with our to With performance the Chris turn over financial details that, Berry, Chris? and an further Accounting recent guidance. will to a provide

quarter Francis, QX guidance we'll open comparisons. will first first and specified, for everyone. the brief growth And share you, financial the XXXX. to hello, provide otherwise We'll overview And a my then fourth figures then in cited our Thank call all of of I our the results. of quarter year-over-year remarks unless questions. are

XX% $XXX compared In QX million the fourth we to XXXX. quarter, of of increase revenue, representing generated a

year-over-year, live XX%. was nights of Again, driven fourth revenue improved bookable including and bookable by of RevPAR. and units, performance occupied in increase metrics XX% nights growth RevPAR this Our growth quarter nights key an quarter year-over-year

QX, We driven nights, units live growth driven contracted had In of ended by units over growth. the units into past conversion the live approximately increase by of quarter with XX% year. XXX,XXX over the XX% this an X,XXX we representing live bookable unit

decline talked $XXX. year-over-year. X% we in The To in fourth despite have year-over-year that quarter in was ADR our was in of previously. strategy, points result about quarter, a $XXX, the ADR point, decline higher RevPAR occupancy fourth basis XX% to up our was a X,XXX XX% the up occupancy

hasn't in respect. this changed Our strategy

rather revenue to balance optimization the is and it of of strike itself. optimize is this and output rate. right trying Occupancy are goal continually a than an we in between goal demand rate effort Our to

costs increased of in operating by Total XX% compensation $X expense the stock-based $XXX inclusive to quarter. million, million and of expenses

expenses live The growth units. and in driven while primarily revenue total increased by increase this, of XX%. overall costs our All in the operating were

on focus of performance. flow continue We primary cash our as to free financial measure

We look flow we this, result muscle structure our cash and this cost of our and Sonder. are free evidence The to investments metric. lens and trajectory free cash building our of the our at at through continue flow is

efficiencies third to to structure XXXX. compared in sequential XX% and by negative optimize negative scale. negative negative quarter, improvement In driven the free million, our third as the quarter cost the as in compared realized was totaled fourth of we the of in negative quarter in fourth flow quarter million also Francis the million $XX improved, XXXX. to margin mentioned, $XX negative costs in of one-time $XX before Free cash XX% XX% cash primarily reaching fourth and restructuring The efforts flow quarter our continued XXXX

to abatement, cash the to by would provide signed. margin, benefit This taking property a the economic into contribution is in which upfront we other assess on I is like live use and account which the to level unit enables excluding performance measure costs. corporate non-property level also our of us property performance deals portfolio update an metric typical of we rent

XX% more In third the quarter of XXXX. than was contribution XX% versus fourth the from the in and QX margin cash double quarter, XX%

performance. We the level am over and in progress continuing financial with this metric I on are are making focused pleased we to improve time, property

the to Turning balance sheet.

our released total in cash million and Note be the of January, and we to collateral remainder cash of already As as bank restricted debt. by credit $XXX cash credit we million and end cash had this majority of of the accounts in that in that requirements year. by $XX to new will $X cash partner. this deposit our XX, sequentially million restricted December transition the restricted of increased million released line we was $XXX cash temporary due levers of of anticipate and

line in of live conjunction our with million credit increase property $XX change partners, to our issued able owners. our capacity support were growth as $XX credit In credit line to supports this to the of million to unit bank also of we letters from

guidance. Regarding

want XXXX, $XXX that seasonally revenue historically a we been growth. QX of better anticipate the pattern our first representing has quarter remind For we year quarter everyone expect and million year-over-year of weakest XX% this than of the year. I again to similar

cash before million For than costs. we better XXXX, negative of $XX free flow restructuring expect QX

from does internal Separately, same forecasters as and based past as a contemplate data third-party knowledge is in slowdown and demand. best available quarters, a not on reminder significant guidance our our the

that, now questions. to happy are your With we take Operator?

have Oppenheimer And with Instructions] we a [Operator line question Jed of the you. from & Company. Kelly Thank

questions. Hey. thinking for then my of about sort talk of RevPAR. Great. taking just and XQ the just Thanks outlook for Can how we you're

It in XQ RevPAR industry in it big that when look seems think to jump like you at overall year-over-year pride we of I XX% hotel this the growth get sort call dissipate. a year. XX%

RevPAR trend? to your expect sort of you great. similar So, thoughts be on follow any RevPAR do would a So

Jed, I'll Hey is off. this this Chris. start Yes.

we we differentiate So, the don't said toward guide which or of bookable -- But XX% better guiding QX, increase out we guidance XX%, of XXXX. than QX versus million split really $XXX an about is night. We are in RevPAR really versus today revenue.

about we is that now. that I perspective So, a just from our quarter seasonality feel good trajectory typically too mean as QX well. lowest recognizing right

really during, other performed COVID of, The sort peers. QX, reminder we in like than year periods better Omicron too is our last hard-hit

comps tougher going peers. going are a other for our into comps us the little from the than to So, QX be bit

of recognition just a So, that.

give And with then Got about how we contribution that Are that be reduction, of expect the expecting it. an of you just the majority to G&A? just positive XQ thinking that? or headcount should should be And we out come update can to your you in cash Just quarter. then of us XQ? some

Jed, again. Yes, thanks

be headcount will In These impact terms reductions of the of the are corporate the to largely impact largest roles. G&A.

answer the that's So, one. for that

We're flow In here on anything other free -- timing, flow further the providing quarterly flow the terms than really reaching at QX. XXXX. free free of for not cash cash guidance we're cash this positive point focused in

on And ramp year? like Got should portfolio you talk supply forward? about be this then be the going we just -- your and units of how it. thinking about the And we All just thinking how should reduction approach can about right. anything then with

Yes.

portfolio sure. a how again. what at look done circumstances -- our on For going we -- macro once And that what on This at our macro we is Chris several best Yes, the each what's we we've these any seen on financing built financing is take current quarter given into past units environment. then we we've a take look the some contracted and based fresh challenges environment exclude of fact properties. that are over at-risk impacts consider months that contingencies

properties are to have out contracted overall a clear look from the on uncertainty be of -- that's portfolio. Just them of some given more still our just they're to financing these We be conservative contingencies. the event our there still in excluded

focused have we've that rates this year as entered the the the hurdle all of that increased free cash lower payback we year, As signings hurdle flow contribution we this muscle. this rates, on periods develop really -- margin into we've

so slowdown few optimistic about over this the why And the months. you've but further of we're of year some past seen pretty signings the course that's

you. Thank

can place to live contingencies into precede decided expected And just before have I of of that Francis to sort maybe those properties these turn the stepping just construction total as would signed question exclude vast would contingencies not take one here, of units of have were because Chris the to financing -- add units. go portfolio piece any are that that predominantly in XXXX the those talking could before converted we've on that explained is we're that majority

And the is the bookable and nights couple live of on next minimal. so units impact for years

Thank question please. JMP line our for of One Securities. with the you. And Please moment proceed. comes Jones next it Nick from

then Great. benefit with Cup Dubai if the And mean XQ taking XQ? XQ that we in the guess I Bowl on from anything Super any Thanks the the World just in one should I so guess for question. from location. note? I

to the we've Happy markets of across Francis answer in – times The Yes, many so happening significant here. events all got question. year. your our a some world across

you be look periods comparison quite at in had there's especially so other things XXXX, level if at felt, could the And especially Dubai strong. impact you an for driving demand, where that aggregate that were rarely

one that it's So have of recovery very these post-COVID. markets sharp

there's performance events? of the as we So result RevPAR puts a lot think business don't but the that or was one-time there of of takes a and inflated

belabor Got guess to the just it. And piece. then RevPAR I

at like It be first commentary kind the this kind are really sounds we year. considering price. half of should kind think of any you least kind of guys some of I heard ADRs of the we've maintain resilient to going that's how mean I in be international mix at how to of I'm be trying ADRs – different these you this shift of question to progress from can we or of maybe angle XXXX. travel as any as come I can a about pressuring resilient guess comes back think

Yes certainly.

the in quality Sonder propositions point price I experience thing relative mind is is we that our that remain of major to especially positioning think affordable value So at [Technical of we of important well about keep our offer. one one option, staying of Difficult] the for that

our with at look group, we we lower come Difficult] when typically ADRs. So [Technical peer better in slightly but

And demand a we particularly [Technical proposition could well hold value this think softer Difficult]. that environment. in so

urban the the further which of from be than piece market don't the well, in I on differentiated insight that other we equation The what like is have any think landscape market looks will comments markets. what economist travel

XXXX that across look view what to the business. should lot are versus at recovered is looking now to kind that it a when the market of RevPAR the We forecasters really we the But state XX from economic there Difficult]. that have baseline we is optimism and travel are economy, based of isn't good despite at our of plan urban what levels. use consensus I in the – [Technical visibility fully of XX in QX these There conservatism is on quite we're which of days to for right overall until beyond say third-party still currently out comes – because a a urban XXXX coming

bit And that's then. an a economy that's despite since quite overall inflated

levels gotten as back of QX XXXX of to So XXXX. RevPAR we've only

we'll the markets broadly an that crystal market on to that and performance will ADR the strong which opine ball. of a see in to want RevPAR there's have part the are. on of But exactly in currently don't expectation we don't course, so And be. we what I

on back If right somewhere quarters, XQ over And live XXXX like units? the ask exception it I could and XQ about, live of the sequentially. units. and between think nine Is looks maybe a XXX look of units with XXXX, XXX it. to Got if question way that of on turn kind growth the the last I

to the has of been I So, correct kind pace you're point think of that this openings. out

have in consisted we right We of properties, portfolio substantial growth business, signed flow live units as the It's sign months that of that the plan. expect positive these not generate last the we that's of to units, live. since majority live in yet, a really the aren't in live growth X.Xx several cash our become announced about

we signed live really expected in years. but So, we a of contribute break over and nights have not certainly several out to that units large forward, do guidance, the the are bookable don't to quarters our deals coming book

last got And it. Got question. I one

Just -- progress to a that going how or low-hanging think should big we travel Thanks. what's of XXXX? you corporate fruit XXXX? of through Is be in kind kind contributor, of as there, about there are kind

Certainly.

So, book-to-corporate I announced $XX growth on XXXX. corporate was sales, really positive mean from million today of which right travel, news some we a

So, really done, more we've there been where of and proud that to as extraordinary and especially drive as team comps, RevPARs a making and progress our there come go progress they've the of not really there's but from weekdays, work lot help traditionally weekday we're in bolster to during XXXX. strong, demand the

But on, as our mark forecasters Of prognosticators course, a business what we capacity already have very get strong about to feel again differentiated demand, travel beyond in XXXX. into there's out. don't share, which will we have how the question good have be insight we laid disproportionate

questions the taking for Thanks Great.

proceed. Thank please. you. comes Josey line And the next question, with for from Ron One it Please our moment Citi. of

up the call process remarks helped GDSs the the questions heard corporate. there. integration booking think question, the amongst how awareness And that's travel, my to growth? of raise I with I driving say to Two, in Nick's the travel, the just with a guys. on of here working Talk to follow just drive taking around how Francis, lot it corporates, how of us prepared you flow doing for Thanks and growth part Great. One to overall there that's about you're plan overall being corporate please.

due and current you your terms And you Thanks, coming seeing comps booking of, that maybe lines. I hear you're travel thoughts to along on summer to tougher summer in Chris, what heard about but love insights think travel things on up COVID, windows, those cannot I -- guys. thoughts trends would talk then in say, the

you. Thank

So me let first with off one, kick it the Ron.

There's we've yes GDSs. business our distribution has team for been demand to channels. add added more So that a travel whole to landscape working our hard,

more to important And off. starting boots kind value to to there really the lot of distribution of sell folks internships. pay a entertainment, on that and leaning in in some for so that included RFPs us are addition to relocations, been angle, that to into are efforts got are Difficulty] corporate season, working ground during efforts. sports, we're these RFP just well as quite the We've corporate a it's customers. And like technology the advocate those housing, course, of proposition, of We've result Sonder verticals and [Technical have many

these corporate kind in cases of booking work these businesses, really our our and lean into well we're for that segments So really offering grow to order volume. finding and use

very with there. taken effort we're get all So that happy to the it's

have come folks the off, let something couple pull from means, to that quite over I'll into done and some question. jump travel And get last really know years. we've It's to but hired Chris by summer of delivered strong that no the it how industry. easy

our of XX we've longer just relying it to travel to is said goes visibility have really probably only that will out internally have comes in the in I the on of term, what restate and sort the we forecast. really QX you same Yeah. information days that Ron, we're research When terms into to XX next there. past,

than through. that year, If year peers say during performed difficult came in last you I comps QX it's QX last to wave our better look at want we the that Omicron really

QX why a tougher looking that's so peers. And when comp bit is other little at

today. as was a QX we was next right there look insight year and hockey went now QX QX of the other any have last we really the QX. than little a, a like several then we from guidance there months bit stick And into is provided into don't which recovery, what But

Got Francis helpful. may. it. That's follow-up if a quick Maybe as I

my -- Just traditional believe positioned to Thank revenue are about there, would on comfort call players traditional you that around goes different like, any any maybe be different the the reason might corporate think if travel is lodging and math offered you. that longer right, XX% term, to given portfolio, of it's travel $XX hard just the out think given more where Sonder but it or more that than corporate be contribution uniquely million, there. lodging all the services do that

Ron. Thanks

I And amount fortunate program we're think steady be of some extremely state leisure. figure debates internally at that's of out, been try a question. the and And sources a versus also the to demand. very other we've will easy to having driven what really be by of strong thoughtful is demand of corporate demand that

and so on and generate to leisure very occupancies and RevPARs -- we've markets. in weekends attractive strong And managed

demand be or And with at from goal lower other RevPARs so come demand that the that would to replace potentially segments. ADRs wouldn't

find answer be each over the coming reason [Technical each that global any market versus an principles out for brands, something going And to particularly we're the a weaker strong and different first would we game. really that a years. Difficulty] hospitality for it's or building there's to optimization So believe from see but

Thank Thank you, you, Francis. Chris.

Next one?

And that, will Thank ladies conference. participating. gentlemen, may you today's for disconnect. Good day. session now Thank and and you. you Q&A I And the with all conclude