Sonder Holdings Reports Q3 2024 Revenue of $162.1 Million, Net Loss Widens

Sonder Holdings Inc. reported a revenue of $162.1 million for the third quarter of 2024, a slight increase of 0.8% from $160.9 million in the same period last year. For the nine months ending September 30, 2024, revenue rose to $460.2 million, up 5.1% from $437.8 million in the prior year. Despite this revenue growth, the company experienced a net loss of $179.4 million for the quarter, compared to a loss of $57.6 million in Q3 2023. The nine-month net loss also widened to $197.1 million from $183.7 million year-over-year. The increase in losses was attributed to a significant loss on preferred stock issuance of $59.5 million and a change in the fair value of forward contracts amounting to $86.6 million.

Sonder's operational metrics showed a decrease in Live Units, which fell by 14.4% to approximately 10,100 units as of September 30, 2024, down from 11,800 units a year earlier. This decline was primarily due to the company's portfolio optimization program, which involved exiting or renegotiating leases for underperforming properties. The company reported a total of 11,200 units in its portfolio, which includes both Live and Contracted Units. The average daily rate (ADR) increased by 11.9% to $207, while revenue per available room (RevPAR) rose by 14.3% to $176, indicating improved pricing power despite a decrease in Bookable Nights.

Strategically, Sonder entered into a significant licensing agreement with Marriott International in August 2024, which is expected to enhance its market presence and operational efficiency. The agreement allows Sonder's properties to be integrated into Marriott's booking platforms, potentially increasing revenue through access to Marriott's extensive customer base. The company has also implemented cost-cutting measures, including a reduction in workforce affecting 17% of its corporate staff, which is projected to yield annualized savings of approximately $11 million.

In terms of liquidity, Sonder's cash and cash equivalents decreased to $27.0 million as of September 30, 2024, down from $95.8 million at the end of 2023. The company has raised approximately $43.3 million through the issuance of Series A Convertible Preferred Stock, with $14.7 million received in August 2024 and an additional $28.6 million in November 2024. However, management expressed substantial doubt about the company's ability to continue as a going concern for at least one year from the date of the report, citing ongoing losses and the need for further financing to meet operational obligations.

Looking ahead, Sonder aims to achieve positive free cash flow through its ongoing portfolio optimization efforts and strategic partnerships. The company is focused on reducing cash burn and improving operational efficiencies while navigating the challenges posed by market conditions and the travel industry landscape. The successful execution of its plans, including the integration with Marriott and the optimization of its property portfolio, will be critical to its financial recovery and growth trajectory.