Sonder Holdings Reports 4.6% Revenue Growth, Improved Profitability in Q2 2024, Despite Liquidity Concerns

Sonder Holdings Inc. reported its financial results for the second quarter and first half of 2024, showing notable changes in revenue, profitability, and strategic initiatives compared to the previous fiscal period. For the three months ended June 30, 2024, the company generated revenue of $164.6 million, a 4.6% increase from $157.4 million in the same period of 2023. For the six months, revenue rose 7.6% to $298.1 million from $276.9 million year-over-year. This growth was attributed to a 7.3% increase in occupied nights and a slight rise in average daily rates.

Despite the revenue growth, Sonder reported a net loss of $17.7 million for the six months ended June 30, 2024, significantly improved from a net loss of $126.0 million in the same period of 2023. The company recorded a net income of $32.7 million for the second quarter, contrasting with a net loss of $44.2 million in the prior year. The loss from operations for the second quarter was $31.7 million, an improvement from $41.6 million in the same quarter of 2023.

Total costs and operating expenses for the second quarter decreased to $196.3 million from $199.0 million, reflecting cost-cutting measures and a reduction in employee compensation. The company also reported a significant reduction in stock-based compensation expenses, which fell to $1.8 million for the second quarter from $8.3 million in the same period of 2023.

Sonder's liquidity position has been a concern, with cash and cash equivalents dropping to $17.5 million as of June 30, 2024, down from $95.8 million at the end of 2023. The company has incurred substantial losses since its inception and has expressed doubts about its ability to continue as a going concern for at least the next year. To address liquidity issues, Sonder has secured financing arrangements totaling approximately $139 million, including $43 million from the issuance of Series A Convertible Preferred Stock.

Strategically, Sonder has initiated a portfolio optimization program, leading to agreements to exit or reduce rent for approximately 105 buildings, which is expected to yield annualized free cash flow improvements of over $40 million. Additionally, the company announced a strategic licensing agreement with Marriott, which will allow its properties to join the Marriott system, providing access to $15 million in key money and enhancing revenue potential.

The company also underwent significant workforce reductions, impacting 17% of its corporate roles, which is expected to yield approximately $11 million in annualized cost savings. Legal challenges remain, including ongoing litigation related to a lease dispute, with potential damages sought by the landlord amounting to $36.9 million.