SOND - Earnings call transcript Q2 2022

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Operator

Good day and thank you for standing by and welcome to Sonder Second Quarter 2022 Earnings Call. 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] Please be advised that today’s conference is being recorded. I'd now like to hand the call over to your speaker today, John [ph], VP, Head of Investor Relations.

begin. may You

Unidentified Company Representative

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

Co-Founder website our Banker, found Relations on are; and details can additional me call be are and on at XXXX results Davidson, CEO; section available shareholder commentary in which Joining of our Investor and quarter of and President the Sanjay investors.sonder.com. management CFO. second our Full the Francis today letter,

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

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

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

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

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

Francis Davidson

remarks reporting quarter us to you two and afternoon, I'm today. very XXXX today on everyone areas. cover strong be Good our John. joining will second thank results. My Thanks, pleased for

flow on then million our update improvements our last margin, cash flow, a improved quarter, negative and June achieving a XXX% cash and last $XX quick year quarter compared of X. for significant before quarter negative million to provide negative $XX to XX% ago. negative strong to by versus excited announced one-time flow second in free flow overview $XX free results on free an First, ago. negative I'll performance quarter yielded report restructuring costs improving positive second financial year plan also highlighted cash XX% million cash negative I'll We're provide of a the which our and This

conditions steady provide emphasis later rapid In XXX% addition, shift fully market our to flow cash driven and since flow. incremental this not will positive on cash restructuring at To that which financial initiatives. fundraising RevPAR by positive firmly be cash level lease on with bar was cash in raising and metric it a cash performance growth Sanjay a and without million In our flow payback levers believed look on enable prudent a our basis, the focused June, costs, broader on focusing cash positive to while during free XX% positive the RevPAR was costs, rapidly had it reducing contribution improved within our plan, We focus decision signings On quarter sustainable additional announced this cash our and isolates robust flow to free shifted on property flow four was margin, versus $XXX XX% Instead, from little demand therefore our opportunities. an is growth due clear, for grew excluding a executing and hyper right quarter. to to We in achieve free performance rapidly plan by achieving grew cutting we second our to believe strong including which by XXXX. more to will snapback space, to us key QX. preserving call. on signings year-over-year cushion. materially the revenue the shift of to lack the detail to environment. plan, macro adapt are XX% plan strong quarterly positive, achieving important additional growth changed changing travel strategy, we cash committed Successfully

CapEx cash costs. XXXX going is given to reduce costs lever incremental million units in expect forward. savings annualized on costs we cost an we $XX and units specifically $XX QX plan, capital versus More reduced a restructuring before approximately on finding one-time cost in million basis first focus live savings also going result our net in in The cash nearly by $XX million June, a restructuring executed pre-opening associated from costs. annualized XXX% light will Separately, annualized which with

lever second lowering board, to expansion simplify findings on our CapEx, net the lower headcount business. is plan This proactively plan pre-opening across geographic us and pace. back reducing The and the cut costs enables

We continue already incremental by bar signing as well meet our deals high will units, as to live for signings. units scale opening contracted our that

third units. the threshold will upfront are lever, included ramp for up cash light. rent help come to leases portfolio to which onboarding the and as cash our our given deals and our deals is they to abatements associated capital be positive these result, flow sign increasing signings. already costs a originate upfront Prior announcing costs live brings As our me majority to were commonly accretive live, period contracted these of offset unit with incremental and This our unit plan, already incurred high existing the revenue

us individual offset have in upfront landlord the to addition, for the set will leases, now units that bar have the building paid successful to a negotiating the by raised majority us capital And light. vast prepare allowances This help up. sign well and only aiming are In furnish in further capital XXX% invested of to we been the we as units. as

already about So fixed effectively. new deals even pipeline we where they of stringent also healthy more that focusing operations on we're costs profile. cash signed consume in late after or more come have fit won't flow positive contracted our plan deals units to as excited order our live. We're only leverage countries Further, cash stage this

fourth lever rapid efforts and lever is final RevPAR focusing free payback cash on initiatives. flow improving Our through

a in contribution landlord Given larger fixed a in margin. our much increase to payments, small cash translates RevPAR increase

As focusing payback to RevPAR was QX elasticity in drive occupancy our includes strategy, advantage us helped other significant XX% enabling such, higher of in on occupancy higher versus bookings rapid advance. we're among implemented This increase things, and to further a in a RevPAR. initiatives, QX in marketing ago, to drive take which several year XX% demand rate including

focused in on QX our a accounts nearly remain travel corporate hundred XXXX. ended QX quarter offering active new we and Additionally, XXX last XXX and with growing versus

travel still gain its incremental to this early and in we're opportunity offering, our traction drive to quarter we're since continued each the While stages we've excited launch about incredibly corporate an RevPAR. of as

the offerings revenue should Lastly, we're building on year, further focused especially in RevPAR, which second several the of out beyond. half also XXXX benefit ancillary during and

cash deliver forward new fair opportunity business I'd our four terms value. to market our travelers share the we the Separately. an options, tech-enabled I'd properly team finish, and and intention express partners would work to like value all gratitude world asset, our are further and and we This all. believe Beyond ongoing market Banker guests I'll to leisure for thank and exchange to will event to call outlines detain positive I to continuing flow to like to our employees. update X-K for CFO, a on that briefly a drive stock same design them. outlook and another you one-time for signature To investors which program turn to We and strike Sanjay levers, one-time With also key our most across growing recent after today across on employees employees on around of and with their our hospitality attracting strongly stock current to our we our performance Sanjay? filed President to their the world, experience options and of our to valuable segments. both voluntary these my provide of details focus discuss look continue over revolutionize on our this members exchange to our with sustainable provide support. option the equal for existing incentivize to our critical are remain at shareholders underwater that, our an plan financial laser-focused launch is for to close, price tireless like execution a reiterate for long-term the

Sanjay Banker

call a and results Francis hello in overview brief I everyone. QX you, This share and Unless by the $XXX of This quarterly of the the was remarks a growth $XXX the questions. revenue in specified, will quarter, time remainder Thank revenue single we are cited second comparisons. year-over-year otherwise financial for wide to equipped QX first compared provide representing a We'll quarter margin open figures my afternoon, generated to our then outlook second of we highest XXXX. the XXXX. company million all in and quarter. the a our history of XXX% increase million In

QX the Our fueled grew by live XX% of RevPAR year-over-year and growth XX%. expansion growth was revenue portfolio, which our

core new the of ended we meaningful RevPAR units live profitability from milestone, X,XXX just as is economics XX% New in in Greater an and new portfolio capitalize one XX operating City units market exciting standpoint. total these RevPAR benefit unit on driven occupied year-over-year, market. properties York reduced approximately X,XXX conversion offering. in York live conversion, City with in performance our and only XX,XXX units contracted both including growth worldwide live corporate quarter Three travel Moreover as leisure our metrics by to opening risk our end, live from Not by well a density we Sonder quarter QX. a are both At units units, properties provides improved in growth. units opportunity nights, sales year-over-year efficiencies. a New offering where into we substantial surpassed this strong representing of RevPAR. as it's and key bookable improves the Our nights within better the had our We growth additional representing approximately XX%

June flow the positive signings During ahead QX, slowed cash our we plan. proactively finalization of of our deal

light targeting includes forward. earlier, As this Francis deals noticed plan XXX% hurdle moving higher rates capital

on conservative, to increasing units units XXX,XXX addition had nights. objectives occupied certain growth. not XX% plan portfolio exited cash we an our increase positive from certain the occupancy by also growth total rate, the strategic drove with count, driven approximately did focus contingencies. substantial be QX, contracted live our flow contracted nights, in our with it unit our and In XX% that align In Combined of of bookable with we excluded

our result, As to XXXX XX%. a basis rate occupancy points increased

growth As an XX% noted, drove to EDR of RevPAR XX% of a growth in demand a $XXX. strong to travel year-over-year snap during back record QX $XXX,

Francis initiatives by the continue XXXX, of to upsides continue about earlier. Total as to will increased expect we the anticipate $X forecasters in of rapid party driven payback urban million recovery ahead, RevPAR quarter. primarily additional Total stock-based million recover and third benefiting from well were which spoke of the Looking through travel, compensation as units. cost and of QX expenses the inclusive to XX% expansion by our expenses live cost in $XXX from expense

in we cash June, in flow free noted profitability. cash notable negative flow we second negative plan measure have conjunction pleased million profitability negative metric As and our I in ago. how focused $XX announcement main assess the quarter, compared of in quarter on positive improvement we This free aligns $XX with a with as costs year internally. with am million cash which one restructuring totaled million $XX before the in to flow first one-time a

XX% also flow negative shows last our second of the to Given XXXX in significant negative compared negative improvements, the XX% XXX% growth, revenue margin and year. reaching strong of quarter quarter in cash first free

the During this year. half restructuring QX, million out remaining cash second and $X.X the anticipate $X.X we to in million of in occur costs paid

the $XXX to June $XXX XXXX, cash as Turning million sheet, in debt. balance in we and had total XX, of million

onboarding as of better is third units representing outlook low expected lower is anticipate the experience, largest to the live in by effect versus XXX RevPAR in of million faces and Dubai ever more impacts that growth of quarter. anticipated year-over-year all continued short quarter nights term a XXXX. building of ramping associated impact growth in properties the than This in of the the Finally, regarding we unit QX XX% season. bookable building seasonality primarily summer our region our typical quarter from due FX headwinds as XXXX, well RevPAR. third in and $XX experience with our $XXX million offset revenue the than the The to new

approximately don't focused we reduced marketing, while we month by Additionally, June, spend performance plan. as XX% on over on spend cash much flow month in the positive we our

marketing spend RevPAR. we impact, between temporary the reduction QX revenue and a have QX our marketing impact to Given spend time on expect lag performance in the negative

July, a ramped we quarter, up we historical RevPAR fourth However, to to to quarter. relative in in third expect the spend uplift the modest provide which levels back

to XXXX. full We grow as revenue continue XXX% expect to to to XXX% compared between year by full year

expect QX $XX negative before We in flow restructuring free approximately cost. million of a cash one-time

are For Frances our detailed close strong by plan which earlier; raising rapid than in half opportunity our that combined, of today of cash cutting we by flow incremental drive year, cash I'll restructuring before enormous. and levers reaffirming $XX results bar these pulling cash costs. negative and focusing remarks fundamentals remain payback signing the prepared our our the costs, signings reducing reiterating space, positive the second is business RevPAR million on better and market free QX initiatives. flow We'll key plan, the of four one-time QX

long-term cash I'd sustainable and of and hospitality to for investors partners all thank plan of We're to now thank like for value all positive take all teammates continue questions. quarter, on Operator? for Sonder a We to via driving are your happy your support. flow stakeholders for our of our continued all. our great our revolutionize focused and

Operator

first And from Kelly question comes our instructions] Jed Oppenheimer. from [Operator

is now line Your open.

Jed Kelly

and Thanks question and voice good for aboard. hear your great. my John, to taking welcome Hey,

of of talked you starting that just, questions, it's second into rationally? like immediately you cash couple supply, you are for Can see light offerings. First the difficult strategy increase we're just macro can if dig your question RevPAR in RevPAR supply that and your capital And ways on RevPAR you increase dive competitors kind to this you. act about under you terms to accretive. in to more my competitors in Can especially cash XXXX, Thank plan a more then more is and environment.

Sanjay Banker

Sure. again. to question. your Thanks a voice hear lot, your Jed, Great for

supply and ask the strategy the light seeing and themes some that RevPAR offering. to then of supply travel have the I'll I'll So, start address corporate capital with we're Francis Francis and the

light capital deals the pursuing that our the been been on capital a increasing now for we've So side theme of that has several quarters broad are that fraction light.

us, six For accretive within view that deal as light a months. cash capital we is

developer the can landlord through of that goes one upfront is happen The the through is so principle for abatement. property. upfront also that comes the ways. And variety into FF&E providing of It a a funding form

path we month multi-family of size both see a segment conversion across or how But less. generating. six In or many i.e. single has and the there's cases, own to and those are light deals or its of we to see the deal generating we that are from the the months created don't are really deals estate that. across in that consistently but cash accretive so is XXX% hotel we're see economics get of single partly varies that's to deal of we one so deals of we different competitors and look we it reaching advantage that way deal any markets and properties on capital have because that deals competitors no do every at getting look and It's real well and XX we months So dozen pursuing that segments cash pursue. are competitor we're over to supply because at composite competitor our plus stated two deals, within of those countries. off We deals

Francis Davidson

Yeah. Francis here.

the jump Let RevPAR. on into me, XXXX address question

that things, cash in core a in order of Like we're casual lot improve to four it's plan, pulling improve So RevPAR. of there's free our a positive flow. lot of one pulling we're we that our levers to mentioned levers

examples. a just couple I'll through So of go

tested a to is series room of that and the give of out a generate revenue outside the we months that that over there things that we've several opportunity the so there's conviction us first big last there's rate. streams The ancillary revenue just improve

So we're examples pets, are particularly that in that, exploring breakfast rates of parking, EMEA, workstations. further

experience can otherwise enhance both might and not us. guest a there's variety for we with where think cases So we book that the offering even an have of a use

ancillary So to streams. of in for addition of revenue these fees kind incremental double generated there there's the benefit demand

that's that think the XXXX, of to RevPAR. for one is help bolster going components So we

big program The discussing and is was This quarters corporate growth XXX fast it That's now that is XXX we've seen, I mid-XXXX for accounts. from up a latest really that figure a believe QX. been accounts. Another one right? launched we few we've of travel, in for is QX corporate corporate in

and a component So comps. that urban settings, XXXX. this lot this generating be that a there's important is going of primarily really pursuing operates more new travels really of quickly of we where demand gap a streams as have performance weekday RevPAR, reminder, a just And, as where in in business in we're a business specifically to versus

capacity building segment outside corporate technology yield revenue there pursuing travel in that and So there's better ideas things have fixed improve out of extensive that pattern, just to -- other by gap help we length series coming our that to of that other, conviction And keep the our very then further. the of go improving close of years. to roadmap in RevPAR we'll improvements, ideas a stay management,

Jed Kelly

then in price Thank how close, our impact the thinking that exchange And the anything, about announced is Great. models? any you. just should after on we on you or share be or options there

Francis Davidson

that Yeah, absolutely. to address Happy question.

is people. our to but talent in and individual them very just that assess got cash important proud our some and most philosophy in heart bring very the all down our, people we and asset our We've team not this team, talented are exchange contributors. of of really So We're positive train achieve thorough develop the go at to believe the and option we flow program members management at how Sonder, the a our plan. that way

our it's we we employees. absolutely have -- retain critical that so that top And

at is to but thought program would exchange have lever time an that compensated. don't ensure be that option initiating share this crucial we team we to initial So this competitively details our absolute

Operator

comes Ron And Josey question Citi. instructions] next from our from [Operator

Your line is now open.

Ron Josey

Sanjay, in very Great. question. results here Thanks occupancy hoping the RevPAR for I'm us you Francis, strong understand, in can quarter. taking the help

July us trends how understand maybe were So help along. coming

balance, and Just broader and June, And picture, those how RevPAR to -- steps properties newer from maybe I guidance because think to talk given if, in Thanks coming two for that of calling metrics. just particularly strokes -- broader as anti-revenue understood continued streams saw the the relates saw to you July plan of RevPAR it whether then launching going June mentioned one forward. XXXX but the plan rates Dubai, you with bigger us occupancy guys. patterns

Sanjay Banker

certainly rate. take the the this I'll, the I'll Yeah, on, one how start balance here and with occupancy with

Our about figuring generate it's is mathematics RevPAR. view what and strongest will that all out the

in that's XX% rate occupancy we've improvement elasticity seeing seeing, QX, as can tests and substantially a the that especially series year-over-year. that price around fluctuating which the demand low been XXXX higher we've lever, so comeback high this is by, ran of XXs, of COVID points basis been an And we've a at in RevPAR that we're XXs, post demonstrate that of that that yield case

outcomes So of strategy, the RevPAR very the announced. we happy this quarter about which just that led to XXX

not are we July at business. for and our the we're across in and bookable see your is this interesting is the our think we for we revenue, we on some that put value I how an per one -- portfolio $XXX described for seeing increase listen entire it that, strategy was but And, higher could that showing detail of results, being which guidance out that test yield this we're on here nights. seeing we're meaningful as time, QX, providing the deliver So board QX now as rate million occupancy really question RevPAR

slightly lower but will -- more open, be So or a by properties this be rather we're RevPAR lower offset QX. in RevPAR will

the dynamics Dubai to so, that comes a And one. it when alluded is really you as well, to important

up Dubai just that's biggest be property coming XXX during large and building online season online. that online, low is ramping are the units Dubai. in portfolio we've So This in that ever got a the over to This we've that in will our coming are come QX. expected signed,

this why the wanted reasons the QX will be impacted to. I but for Sanjay, of you one RevPAR that's So think

Sanjay Banker

a travel Yeah, not category. anybody to Sonder, a speak don't just Ron, robust in the that just for supplement. had months, Obviously we but dynamic, travel QX not individual everybody often but for

course, unusual we assume in so demand And is of don't unfolding. partly difficult of level the how the partly seasonality. that's this same and that fall That's patterns of year winter,

our it's think bigger though, in near I mind view, important in picture travel, were even to QX where perspective keep nowhere to to pre-pandemic. are in relative full we recovery from a though we that

while in everything and that given a had of even level recovery lot from we believe heavy market QX the of that in don't outlined XXXX. meaningful there's even travel there's and going specifically have so at a And as market into XXXX, a just levers detail. XXXX, patterns, into we meaningful we that's that, do see we identical do to QX a have a Sonder a necessarily may on looking QX looking that in headroom headroom relative just top Francis from world, standpoint, of believe looking standpoint QX, our recovery on own And

Ron Josey

Sanjay. Got you, Thank Francis. it. Thank you,

Operator

Thank am questions. you. This for you today's participating. conference call. concludes And further no showing Thank I

disconnect. You now may

Sonder (SOND) 10 Aug 222022 Q2 Earnings call transcript