Sonder Holdings Inc. Reports Record Revenue for Q3 and Raises FY 2021 Revenue and Adjusted EBITDA Outlook
- Record Q3 2021 Revenue of $67.5M, Up 155% YoY
- $126 Revenue per Available Room, Up 64% YoY and 26% vs. Q2 2021
- Raises Outlook for FY 2021 Total Revenue to $200M - $205M vs. prior Outlook of $180M - $190M
“We had another stellar quarter, setting a new company record for quarterly revenue and year-over-year growth with leisure travel demand surging in both our international and domestic markets. Labor Day weekend 2021 generated our highest demand of any holiday since President’s Day weekend 2020 with our Revenue per Available Room (“RevPAR”) reaching $160, approximately 97% of 2019 Labor Day weekend levels. We're aggressively growing our global portfolio to meet this demand and are on track to surpass 18,000 Live and Contracted Units by the end of the year. Our compelling value proposition for real estate partners continues to propel our growth as we successfully secure exceptional properties at attractive economics. Recent highlights include opening our first hotel in France, the Sonder Atala, which is steps from the Champs-Élysées, expanding in coveted neighborhoods in Mexico City and Dubai, and continuing to grow our footprint in the United States,” said Francis Davidson, Co-Founder and CEO of Sonder.
“The innovation flywheel continued to accelerate in Q3 as well. We launched a redesigned guest app bringing all stay information and services onto a single screen, and continued to build out the operating system for hospitality which we believe will translate into a better guest experience and superior economics. We also unveiled a flexible work-choice model, providing our people with the freedom to work in a way that suits them best so that we can stay focused on delivering results,” continued Davidson.
Sanjay Banker, President and CFO of Sonder, said: “Travel is rebounding sharply across our 38 live global markets with RevPAR at 83% of Q3 2019 (pre-pandemic) levels and occupancy rates near 70 percent. We saw robust Average Daily Rates (“ADR”) of $184 for the quarter, driven primarily by a combination of demand acceleration and our sales and marketing efforts. Additionally, our live portfolio continues to expand and drive more bookable nights. Given these strong leading indicators combined with our sustained revenue outperformance year-to-date, we’re once again raising our total revenue outlook for full year 2021, and also raising our Adjusted EBITDA outlook for full year 2021.”
Third Quarter 2021 Financial Results
- Total Revenue of $67.5 million, a 155% year-over-year increase and a 43% increase over Q2 2021
- $184 ADR, a 79% year-over-year increase and a 25% increase over Q2 2021
- $126 RevPAR, a 64% year-over-year increase and a 26% increase over Q2 2021
- 17% RevPAR outperformance versus traditional hotels (upper upscale hotels in cities where Sonder operates), up from a 5% discount to traditional hotels in Q3 2019 (normalized for pre-pandemic)
- Continued strong Occupancy Rate of 68%, 600 bps below Q3 2020 in which we saw elevated occupancy due to significant ADR discounting during the height of the COVID-19 pandemic, and consistent with Q2 2021 levels
- 535,603 Bookable Nights, a 55% year-over-year increase and a 13% increase over Q2 2021
- Property Level Loss of approximately $4 million, an improvement of nearly $3 million year-over-year and over $8 million compared to Q2 2021
Third Quarter 2021 Corporate Highlights
- Approximately 6,300 Live Units and over 16,000 total Live and Contracted Units as of September 30, 2021
- Announced incremental investment of ~$330 million and resulting total capital of ~$530 million provides for a fully funded business plan, in addition to trust proceeds of up to $450 million
- Continued to build a world class board of directors: named Frits van Paasschen, current member of the Board and former President and CEO of Starwood Hotels, as Lead Independent Director; appointed Janice L. Sears, former Bank of America executive, as a Director and Audit Committee Chair; and appointed Gilda Perez-Alvarado, Global CEO of the Hotels & Hospitality Group at JLL, as a Director
- Launched operations in France with the Sonder Atala, a 48-unit property located steps from the iconic Champs-Elysées in Paris, and recently contracted an additional 25-unit property in the eclectic and trendy 17th arrondissement
- Expanded footprint in Mexico City, contracting over 600 additional units across eight properties, concentrated primarily in the Condesa and Roma neighborhoods
- Increased Middle East presence with the opening of two new high-rise towers comprising over 300 units in downtown Dubai with views of the Burj Khalifa
- Continued proactive focus on ESG, including through the adoption of new policies affirming our zero tolerance approach to modern slavery and human trafficking
Sonder is raising its outlook for its full year ending December 31, 2021 as follows:
- Total Revenue between $200 and $205 million, increasing initial outlook (as of April 30, 2021) by 17% at the midpoint of the range and revised outlook (as of August 10, 2021) by 9.5% at the midpoint of the range, and implying 2021 total annual revenue growth of 75% at the midpoint of the range
- Adjusted EBITDA loss better than $240 million, increasing initial outlook by 17% from prior outlook of Adjusted EBITDA loss of $290 million
- All references to Adjusted EBITDA in this document are based on our revised methodology as of September 2021.
- Adjusted EBITDA methodology prior to September 2021 utilized Non-GAAP rent (which accounted for the benefit of rent abatement in the period in which it was received) and Non-GAAP Other Operating Expenses included the benefit of Capex Allowance in the period in which it was received.
- Adjusted EBITDA now utilizes GAAP rent, which amortizes the benefit of both rent abatement and benefit of Capex Allowance over the term of the lease.
Financial Summary and Operating Results
Sonder’s Third Quarter 2021 Summary Results presentation is available at: sonder.com/investors.
As previously announced on April 30, 2021, Sonder entered into an agreement to combine with Gores Metropoulos II, Inc. (“GMII”) (Nasdaq: GMII, GMIIW and GMIIU), a special purpose acquisition company sponsored by affiliates of The Gores Group, LLC and Metropoulos & Co. (the “Merger Agreement”). As part of the transaction, Sonder and GMII raised a $200 million fully committed PIPE (the “Existing PIPE”), led by an affiliate of The Gores Group, with participation from sophisticated institutional investors, including Fidelity Management & Research Company LLC, funds and accounts managed by BlackRock, Atreides Management, LP, entities affiliated with Moore Capital Management, Principal Global Investors, LLC, and Senator Investment Group.
The transaction was amended on October 27, 2021. The amended terms revise the combined company’s pro forma enterprise value to $1.925 billion. As part of the proposed business combination, the Company will receive approximately $110 million in incremental capital from affiliates of Gores Metropoulos II and other leading investors including Fidelity Management & Research Company LLC, funds and accounts managed by BlackRock, Atreides Management, LP, and Senator Investment Group pursuant to new PIPE transactions (the “New PIPEs”), in addition to the $200 million Existing PIPE, which continues to be led by affiliates of Gores Metropoulos II, with participation from top-tier institutional investors including Fidelity Management & Research Company LLC, funds and accounts managed by BlackRock, Atreides Management, LP, funds and accounts managed by Principal Global Investors, LLC, and Senator Investment Group. Additionally, the Company has put in place a non-binding term sheet for Delayed Draw Notes of $220 million with existing PIPE investors, to be available following closing of the proposed business combination. Subject to any redemptions by the public stockholders of Gores Metropoulos II and the payment of transaction expenses at the closing, the $200 million in Existing PIPE proceeds and approximately $110 million in proceeds from the New PIPEs will be used together with up to $450 million in cash in Gores Metropoulos II’s trust account and Delayed Draw Notes of $220 million to fund operations and support new and existing growth initiatives.
The proposed business combination remains on track to close in the second half of 2021, subject to approval by Gores Metropoulos II’s stockholders and other customary closing conditions.
Additionally, the parties agreed to extend the Merger Agreement end date from October 28, 2021 to January 31, 2022 after which Gores Metropoulos II and Sonder would have the right to terminate the Merger Agreement if the proposed business combination has not been consummated by January 31, 2022.
About Gores Metropoulos II, Inc.
Gores Metropoulos II, Inc. (“GMII”) (Nasdaq: GMIIU, GMII and GMIIW) is a special purpose acquisition company sponsored by an affiliate of The Gores Group, LLC, a global investment firm founded in 1987 by Alec Gores, and by an affiliate of Metropoulos & Co. whose Principals are Dean, Evan and Daren Metropoulos. GMII was formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Mr. Gores and Mr. Metropoulos together have more than 65 years of combined experience as entrepreneurs, operators and investors across diverse sectors including industrials, technology, media and entertainment, business services, healthcare and consumer products and services. Over the course of their careers, Mr. Gores and Mr. Metropoulos and their respective teams have invested in more than 180 portfolio companies through varying macroeconomic environments with a consistent, operationally-oriented investment strategy. For more information, please visit www.gores.com.
Sonder’s Use of Non-GAAP Financial Measures
Sonder supplements its consolidated financial statements presented in accordance with generally accepted accounting principles in the United States (“GAAP”), by providing additional financial measures that are not prepared in accordance with GAAP, including Property Level Costs, Property Level Profit (Loss) and Adjusted EBITDA. Sonder believes that the disclosure of these non-GAAP financial measures provides investors with additional information that reflects the amounts and financial basis upon which Sonder’s management assesses and operates its business. Sonder’s definition may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. These non-GAAP financial measures should not be viewed in isolation or as a substitute for, or superior to, measures prepared in accordance with GAAP.
Sonder Holdings Inc. Reports Strong First Quarter 2021 Results Driven By Rapidly Increasing Travel Demand And Continued Operational Excellence
Sonder is revolutionizing hospitality through innovative, tech-enabled service and inspiring, thoughtfully designed accommodations combined into one seamless experience. Launched in 2014 and headquartered in San Francisco, Sonder provides a variety of accommodation options — from spacious rooms to fully-equipped suites and apartments — found in over 35 markets spanning ten countries and three continents. The Sonder app gives guests full control over their stay. Complete with self-service features, simple check-in and 24/7 on-the-ground support, amenities and services at Sonder are just a tap away, making a world of better stays open to all.