Sonder Restructuring to Include Layoffs, Growth Limits

Summary

A news article by Chris Davis dated June 09, 2022 reporting that short-term accommodation provider Sonder Holdings laid off 21 percent of its corporate employees and 7 percent of its front-line staff in a restructuring meant to increase cash flow, announced on a Thursday conference call. Co-founder and CEO Francis Davidson framed the move as a response to markets that now prioritise cash flow over growth. Growth will now come mainly from units already under contract in countries where Sonder already operates: 7,700 live units at the end of March and another 11,600 under contract. Sonder projected second-quarter revenue per available room of about $160, up from $117 in the first quarter and $100 a year earlier, second-quarter revenue up about 140 percent and full-year revenue up 100 percent to 110 percent, with positive cash flow expected in 2023.

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Sonder Restructuring to Include Layoffs, Growth Limits

Accommodation provider cuts corporate roles in bid to increase cash.

By Chris Davis / June 09, 2022 / Contact Reporter

Short-term accommodation provider Sonder Holdings this week laid off 21 percent of its corporate employees and 7 percent of its front-line staff as part of a restructuring designed to increase its cash flow, the company announced Thursday.

Sonder's upcoming growth now will be driven primarily by opening units for which it has already signed contracts, executives said, in countries where it already operates.

Company executives during a Thursday conference call said they remained optimistic and confident about travel trends, including business travel, and anticipated strong demand growth during the summer and beyond. "Nothing we're announcing today has anything to do with our enthusiasm for the travel market going into the next couple quarters," Sonder president and CFO Sanjay Banker said.

Sonder co-founder and CEO Francis Davidson positioned the decision to restructure as a reaction to financial markets. "The market dynamics have shifted clearly from a growth-oriented market to one that prioritizes cash flow positivity," he said.

Affected employees were notified this week of the layoffs, and the company said it would provide "severance, benefits continuation and other support to assist departing employees with transitioning to new roles."

Davidson said the front-line staff laid off "primarily" included personnel working in Sonder contact centers and in roles associated with unit openings. "It's crucial for us to be able to deliver on a really high service standard," he said.

According to a Sonder filing with the U.S. Securities and Exchange Commission, Sonder chief technology officer Satyen Pandya departed his role June 8.

Sonder said it had at the end of March 7,700 live units available for booking and another 11,600 under contract to open. The company indicated it would further expand only in areas that did not require significant investment to do so, and as such did not plan to enter any countries in which it did not currently operate.

Davidson and Banker said the company's business and travel demand remained strong. Sonder projects second-quarter revenue per available room of about $160, up from $117 in the first quarter and from $100 in the second quarter of 2021.

The company also forecast second-quarter revenue to increase about 140 percent year over year, and full-year revenue to increase about 100 percent to 110 percent from 2021. Sonder expects to achieve positive cash flow in 2023 but did not specify further.

Sonder earlier this year went public through a merger with a special purpose acquisition company.

RELATED: Sonder: Corp. Travel Play in 'Early Innings' but 'Huge Opportunity'

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