Skift Take

Sonder is a prime example of a company that shouldn't have gone public, but the special purpose acquisition company trend enabled it to start trading. From lots of hype to penny stock, that's the story now.

Property manager Sonder, which continued to tout itself as “a leading next-generation hospitality company that is redefining the guest experience through technology and design,” laid off 14 percent of its corporate workforce.

The company emphasized last year that it was committed to achieving positive free cash flow in 2023, but now seems to be backing away from that pledge and isn’t providing guidance beyond the first quarter, which ends March 31.

CEO Francis Davidson this week tied the firing of these 100 workers to “ongoing macro uncertainty.” The job cuts would lead to $10 million in savings annually, he said. Last June, Sonder laid off 21 percent of its corporate staff and 7 percent of workers in local roles.

Sonder announced its fourth quarter and full-year 2022 earnings Wednesday, and closed trading the next day with its stock trading at $0.87 per share, essentially at a penny stock level. Sonder made its Nasdaq debut as a public company on January 19, 2022 at $8.95 per share. Its market cap Thursday was a paltry $191 million.

In the fourth quarter of 2022, Sonder notched a net loss of $54.8 million compared with $77.3 million loss a year earlier. Sonder’s fourth quarter revenue increased 55 percent to $134.7 million.

In terms of guidance, Chief Accounting Officer Christopher Berry said during the company’s fourth quarter earnings call Wednesday, “For the first quarter of 2023, we expect revenue of better than $110 million representing 37 percent year-over-year growth. I want to remind everyone that Q1 has historically been our seasonally weakest quarter of the year, and we anticipate a similar pattern again this year. For Q1 2023, we expect free cash flow of better than negative $45 million before restructuring costs.”

He added that the company would not provide guidance for full-year 2023.

Last June, Davidson said the company was “fully committed to achieving positive quarterly free cash flow within 2023.”

But Wednesday he seemed to lower expectations, saying “our focus remains on reaching our first quarter of positive free cash flow in 2023.” 

Berry said Sonder has seen a slowdown of new property signings over the last few months.

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Tags: earnings, property managers, sonder, spacs, vacation rentals

Photo credit: A three-bedroom Sonder apartment in Chicago. Sonder fired 14 percent of its staff. Sonder

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