Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by and welcome to the Sonder First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] And please be advised that today's conference is being recorded.

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

Jon Charbonneau

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

Co-Founder Bourgault, on are me call and Davidson, CEO; Joining and Financial Chief the Dom Officer. Francis today

additional section Full commentary in at of shareholder which our are XXXX on found management can details website quarter results be first 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 versus 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 to any forward-looking Additional factors results those or in cause found filings. be could that Sonder's implied actual expressed about SEC statements in from differ information can

discussion to conference and today. this of in are statements expectations of current questions forward-looking on your The as risks responses including call based

no update of as or result whether a otherwise as or developments new by to assumes law. required obligation revise them Sonder except

Also, the financial following non-GAAP contains measures. discussion

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

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

Francis Davidson

thank and today. us joining afternoon for Good you Jon. everyone Thanks

made of impact first to decades which Dom short majority off, here great at earnings our on First Bourgault two experience, brings CFO, I'm his has who and over at he working leadership spent his of the Sonder welcome very I'd like already Expedia to Board to a call. was Dom time in financial Sonder. excited vast have new

QX price. Before results, thoughts our share about want share few I I to a on comment

the about been not While which capital broader trading. we're value currently affecting the that's have macroeconomic thrilled markets, understand environment at we obviously shares

the progress made same plan last we desire shareholders, a some cash as The positive flow our our year positivity on announcing it's basis to of sustainable been we've with clear cash since our June has possible. conversations enormous. achieve have in that flow In as soon

To illustrate presentation cash heading We and and free we the we're free results anticipate reasons more direction flow our better believe positivity having to without fund actual communicate have clearly, their conviction investor sustainable Sonder's this updated right raise. equation. we've in our demonstrates drivers achieving cash flow why to the that

and cash improvements flow growth, led cash are The unit four free capacity cash reductions. to levers We to to feel about great that overhead cost forward. drivers preopening have reductions, flow a similar free live pace pulling going to see cost margin improvement, contribution at these keep improve our

seasonally on what million our year. to first Revenue grew to $XXX is Now, quarter by the in of year-over-year quarter XX% results. slowest

a was we and January steady in but RevPAR expected slow month, both February saw March. As a in month-over-month increase

of Additionally, cash negative improvement. million quarter first XX% This on driven such year-over-year. our focus costs the in by quarter XX% improved in a flow free XXXX. overhead continued XX% first $XX the down negative year-over-year cash costs were margin been to negative the versus XXXX as of flow to which million has quarter $XX million first in XXXX, The $XX partially versus of negative free reducing improved

over period. XXXX every nearly on since XX% quarter that fact, in time same while In absolute basis grew have first overhead improved revenue costs dollar of the an quarter

later X% the on a quarter additional past basis Dom our seen over quarter support level little performance margin on to the versus we've contribution reduction a has cash costs, year, first in a like-for-like per in by XX-month detail and in financial expenses service. trailing direct first improvements in On This call. driven the and primarily will a occupied in XX% housekeeping improvement significant ago. night a year drive property XX% provide customer roughly on operations helped

Now to drive on cash initiatives a update contribution our which number margins. RevPAR of provide an I'd like

verticals During our the finance. entertainment education, first existing deepening into as new also while quarter, we expanding including several continued to such corporate verticals business expand in government our presence and including

also We of We're RevPARs another still partnerships an working excited with corporate growth of bolster immense with weekday will momentum GDS solid opportunity. new our about signed travel the leading business management and and industry's many our companies. are further which anticipate very area within year

and we across to a broadly, revenue improved algorithms us to considerable the technology made looking rolling profit optimization of booking innovative Sonder our of continually our length maximize broad management lot window. throughout Next, allowing is the progress pricing range out that we're of capture believe to demand have that our with features stays improve us attracts. More pricing better unique enabling

new uptick across we notable our the During we out a search seen it and we commission produced incremental which of first positive on implement page RevPAR. therefore quarter, Flex already At cancellation VRBO. policy I've in a VRBO views rolled to the all new a same model time, to and and both tested decide benefit

result live believe conversion over elevated of XX% further the an the over in and differentiators. design-led showcases strategy uplift direction important with proposition our most units was I of in strategy our photography end total value on, of This merchandising one first by quarter. of brand implemented and Moving art in the continued XX% has our reimagined to

expect we coverage a before Throughout Monica year. within letter. end The live of FOUND it in of great photography and XX% Santa the and our quarter, XX% find across second an units can the shareholder additional upgrading by example our after the unit you anticipate is and over live

Live us milestone total quarter live for strong to by units year-over-year from In contracted the our in a company. live Shifting units grew driven first conversion to big the This units XX,XXX by units. resulted our portfolio. XX% surpassing

which difficulty still notable still of financing. also more out deals which capital-light. second of a developers primary will doubled be with getting next the although units signed said, encouraging expecting and I'd is a dealing live the slower we in to continue the XXXX but of XXX% half signed units sequentially we're contracted, landlords quarter growth backlog after New that than were first of unit That driver many also over few are quarters. not have point

Before partners over belief turning in support our hospitality. across globe employees and and it guests and continued thank I mission for revolutionize to to want their the Dom, to choosing Sonder for our

Bourgault. With that, the Dom I'll call Chief Officer, turn our to over Financial Dom?

Dom Bourgault

still joining be the I and working business Thank the here in I company I'm when revolutionizing more look as that the first strategy and in company. team are through to have Since overall and right taken preserving have excited two months on while reaffirmed as there hello at reach hospitality growth we cash for you, confidence the the to I deciding ago, Francis, to has technology. in-depth with order design flow profile. to our Sonder but an done and free of soon be company's track, work attractive goal our achieving a is everyone. possible believe positive join the sustainable is

QX revenue questions. results I our through a representing XXXX. then With We'll said, we to generated million increase that of then call financial will $XXX the quarter, of open guidance. provide the of a XX% and first compared In to brief first you take overview quarter

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

growth, we units. live specifically quarter More approximately conversion XX% XX,XXX the units live ended contracted the with of representing by driven units into

XX% by XX%, bookable had nearly to an XXX,XXX QX, first driven with year-over-year component the in $XXX. RevPAR of $XXX, ADR nights, In up growing this was increase the unit growth. we live X% quarter

mentioned, units the going incremental saw of quarter live weakest from new Francis year first seasonally and during our the As RevPAR impact quarter is some the quarter.

new normalized period ramp take reminder, time of units a up to As ADRs. a to

down quarter, same was points benefit quarter. XX% impact second during Con XXX year basis occupancy sequentially. rate up was last residual the with QX but first period rate the saw experimenting seen in a in some Comic occupancy XXX points initially strategy while Occupancy our to higher we from basis began the full year-over-year

by compared expenses in our inclusive increase were expenses growth the $XX driven quarter, operating of to by operating costs primarily the total and increase $XXX The year-on-year XX%. costs QX of million XX% overall to expense Total in and units. revenue demonstrating leverage increased operating stock-based compensation in of live million, strong our

reduction we our across the spoke last we to ongoing remain actions achieving quarter, the about look it on additional an headcount cost cost As in the reductions for in million savings related of cost annualized savings continue to rest confident basis. we relates $XX structure to and

XXXX. of XXXX. compared as million improved of cash and in XX% first cash quarter, mentioned, costs year-over-year compared in to the to Francis restructuring negative negative million the negative quarter In one-time totaled XX% flow $XX before margin flow negative quarter free first first in reaching negative the $XX quarter million $XX fourth also the Free

was cash as flow free to operating in growth, The year-over-year an well as improvement expenses. non-property improvement level ADR due

QX, low in less Given focus ADR typical we and year-over-year on believe comparisons. is more relevant sequential seasonality would performance

decline metric year-over-year. change margin provide in The was primarily QX the visibility of level basis not XXXX. the from in the is metric to Finally, performance on slight of periods, starting which stems quarter for XXXX, cash which use points XXX adjusted in contribution was costs of economic impacting unit a prior certain classification property XX.X% we XX.X% first versus by

to sheet. Turning balance the

in cash, of in and certain it to in March covenant credit cash cash of due lines sequentially First to of million we collateralize from financial to SVB, $XXX and QX, debt. having new QX, in As our the ownership us amendments the spending likely million restricted declined equivalents that total had $XXX and Note to issuance while increase certain failure leading restricted XX, cash dynamic requirements. to under to due Citizens is

going working been partnership and to enhance to with Citizens far, be we'll so We've explore our them with forward. First partnership the with options pleased

to consistent flow free the Sonder and cash demonstrated expect see improvement flow free of beginning in the cash has trajectory we XXXX, a On continue. front, this since

in flow we a to sustainable strong to clear scale, continue base, attractive Forward aim our in shareholders. our value bookable resulting long-term creates in significant formula, that cash one a into leverage strengthen path to combined nights, we cost visibility with as to growth operating free

that exit continued are provide without plan, cash needed to needing profile compared period flow For to raise same runway the should to with such, capital. the trend the as a and balance that to significantly lower execute of our XXXX in XXXX, liquidity our on additional we expecting vertical XXXX free

to year ADRs, it are this felt prudent lower we macro uncertain for our balance the assumptions projected we ahead, RevPAR due conditions facing. lower the to of Looking given

unlikely a is lower free still is goal, cash RevPAR of believe it a positive quarter achieving this we this While under flow year scenario.

self-line growth positive a put Our path additional achieving, the soon on business as having capital. and to primary preserving attractive solid doing rates, as focus flow to while the raise is cash sustainable to again business's possible, without so free

With visibility second regards itself, aiming this also to our approach flow business guidance for are and half and more to guidance quarter, cash the year. upcoming our revenue the into the we changing not now provide free of with provide you of only to but by trajectory

quarter expect the second million, of and and of versus cash improvement $XXX million restructuring $XX flow negative $XXX $XX the XXXX. second the which we at excluding a between For negative quarter XXXX, free and between midpoint revenue is costs million million onetime million $XX

million, half the XXXX, for XX% of year approximately ranges the which guidance between full revenue of $XXX to $XXX and growth For the of translates at midpoint we the provided, year-over-year XXXX. million second expect

million $XX negative or midpoint in year-on-year For a into year of At free XXXX between guidance cash this full expect the million the $XX ranges translates $XX provided, second the XXXX. million and the improvement half XX% a flow, for of negative of improvement. we

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

Operator

much, [Operator so Securities. question from you Jones of the of line Your Thank presenters Instructions] JMP comes Nick first

Your line is now open.

Nick Jones

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

Francis Davidson

with much Yes. versus Francis the on start to live the Thanks here. unit things kicking Nick, portfolio you first Thank growth. for off. total point so I'm going

of majority growth book live we as come we our expect to mentioned the significant the of so from unit contracted units. And

a that seen in units And of of the fact bit were a commercial adjustment contracted would markets you've that environment few reason cleaned growth total convert conditions. bit for deals the been while portfolio reasons quarters one the has capital And has real been feel specifically the live on for high we've book grown our a in little quite biggest so lot which that of There's that financing last has have up the this been live didn't a slower. conviction couple that to we estate units. on the

Even to it's financing think say these more if a don't think we're that contract you developers book come less likely with though if we remove we we prudent that from what financing was have there's a it we to contracted the through. thought going our know would actually contingency

So increased to obviously a in saw we've that live We lot total of actually done units. QX addition cleanup. in portfolio

difficult it's shape will exactly predict so to out. things And how

of very continued periods cash that unit that have that focused We front. growth. start cash to haven't the contribution that this live fueling quickly what's internally the really are the strong economics we're really heart very cash given adding that really But flow. specific guidance positive is thing flow free properties is on This rapid plan. most new opening this on that very unit improvement in dollars payback have the It's at

live focus of team. growth really core the So the unit is

on core priority. these We of deliver large and have a signed a sure live making contracted as actually deals units that we're units focusing book

Dom Bourgault

And is Dom. Nick, this

I'll the question So structure. on second take cost the

happy I'm on you. meeting investors with going the nice and first speaking call be So to forward. here start

you'll of part to us free see cost flow in structure getting margin cash That's So going a improve the to forward. our terms cash contribution of key positive. continue

for cost very to That's you've going ours And of We're in going and was very another to seen Francis overhead forward. component with sure themselves spoke forward. of cost leverage tight that's our about going just to significantly. leverage continue continue portfolio decline. cost to terms There top-line operate overhead overhead in cost a a driving expansion. goal key QX strong

one direct And cost on and we'll cost have is spend another the to last trying We're a decouple to every top rock control. then Pre-opening of growth also direct turning every line. costs standpoint. that's from growth the come down that thing continue optimizing the

of So progress a lot made. has been

numbers. a expand in to see us to the forward lot going margins. can There's it opportunity You still for of continue

Operator

Kelly All so Jed next the line much. comes of right. And of our from question you Thank Oppenheimer. then

Your line is now open.

Jed Kelly

then you we how questions. thinking Could sense thinking we cash on the Thanks year? cash us speak levels maybe a be for to our trough taking you rest Thanks. throughout your about could how RevPAR should about give of be the on level? And should

Francis Davidson

start I'll RevPAR the Maybe on rest year. here Yeah. the for for the question of

seen out we in I'll gives curve bookings bookings us month momentum So about first from like mentioned earlier are to on of high really the nice we've the that some just month. And visibility XX the just really booking days books of you call, in got good to quarter months that remind the XX X.X percentage because or advance. on the conviction on we've

guidance. our And really informed so QX that

then planning the making levels at really ambitious we're that most over how sensitive demand/supply what of cycle. we've exist in we now very analysis a evolve economy are rest growth the we're the understand of macroeconomic few decisions take business time. last into the And And the it expected we're to and in given that to Dom our of we will which the balanced forecast. those importantly assuming each when try approach macro that like we where the given structure seen the approach for want in particular on But cost roll call, earlier that uncertainties XXXX, mentioned we're years right and dynamics variable RevPAR in the markets situated. internally the And cautious to look the in comes to the rest a like really take own at of heroic are currently not in more

Dom Bourgault

Jed, Hi, this is Dom.

take the I'll trough. So cash the question on

So on we're comment trough. explicitly to going not the cash

to back you guidance. point I'll think I the

this I also think year. we've investor seen you page. through going cash to the on We're continue burn have reduce our to might updated materials

good for we easily finalize going there again forecast flow that capital the cash cash of into ending see our We having this to plan have which to You burn. positive raise be and year, not us there. is range end we a execution free at of for get cushion the the to balance the believe translate to can

trajectory we're extrapolate far And our burn get the the actually close at you of going have if too planning. to a out. haven't and look much to can It's and we of maneuver. Again you how how that XXXX sense be done margin we'll

for early But next once just more what point this trajectory of to guidance year forecast we liquidity of closer you our and we have We very or deliver data later that's I'll it. we business to kind for will there construct and and again year get what about the has be update to think year to of rest we this the delivered able the position. how

Jed Kelly

Great. Thanks.

Operator

much. Thank time. call. Thank participating conference further presenters, this you no day. there Have And are today's you disconnect. you a so and questions at good now may for This concludes

Sonder (SOND) 10 May 232023 Q1 Earnings call transcript