Sonder focus for 2023 is positive cash flow, corporate growth

Sonder Holdings says it booked $70 million in corporate sales in 2022, representing a fivefold increase on 2021.

The accommodation platform, which went public via a special purpose acquisition company in January 2022, attributes the growth to having a presence on the global distribution platforms as well as sales people on the ground.

Commenting on fourth quarter and full-year 2022 earnings, Francis Davidson, co-founder and CEO, says growing corporate business further is one of several key focus areas for 2023.

“This year we plan to continue expanding into new industry segments and expect another year of strong growth within the corporate business, which will bolster weekday RevPAR [revenue per available room] in particular, an area with still a lot of upside.”

A further focus is the company’s cash flow positive plan, which it announced in June. For the quarter, Sonder reported a free cash flow loss of $30 million, which compares to a loss of $39 million in Q3 2022 and a loss of $62 million in Q1 2022.

Sonder hopes to achieve its first quarter of positive free cash flow in 2023, according to Davidson.

He adds that the company continued to look at costs, especially in light of current economic uncertainty. The company said in June that it had laid off 21% of its corporate employees .

“As a result, we decided to reduce our overhead expense base both across non-headcount and headcount spend, reducing approximately 100 corporate roles or 40% of our corporate workforce, which will lead to approximately $10 million in annualized cost savings, in addition to anticipated savings from non-headcount spend reductions.”

A further contributor to the cash flow strategy has been to reduce the company’s pace of signing new properties with “growth in the near-term still being primarily driven by opening previously contracted units.”

Sonder reported a 56% increase in revenue to $135 million in Q4 versus the same quarter in 2022.

RevPar improved 11% to $158 year over year and the average daily rate dipped 7% to $191.

Sonder estimates its Q1 2023 revenue will be higher than $110 million, representing a 37% increase year over year.