Investigate restructuring to include layoffs, growth restrictions

Short-term housing provider Sonder Holdings laid off 21 percent of its corporate employees and 7 percent of its core staff this week as part of a restructuring aimed at boosting cash flow, the company announced on Thursday.

Sonder’s future growth will now be driven primarily by the opening of units for which contracts are already signed, according to executives, in countries where it already operates.

Company executives said during a conference call on Thursday that they remain optimistic and confident about travel trends, including business travel, and expect strong growth in demand over the summer and beyond. “Nothing we’re announcing today has anything to do with our enthusiasm for the travel market in the next couple of quarters,” Sonder President and CFO Sanjay Banker said.

Sonder co-founder and CEO Francis Davidson called the restructuring decision a reaction to financial markets. “The market momentum has clearly shifted from a growth driven market to one that prioritizes positive cash flow,” he said.

This week, affected employees were notified of the layoffs, and the company said it would provide “severance pay, continued benefits and other support to help outgoing employees transition to new roles.”

Davidson said the frontline employees laid off “primarily” included employees working in Sonder contact centers and in positions related to divisional vacancies. “It is extremely important for us to be able to provide services at a really high level,” he said.

According to Sonder’s filing with the US Securities and Exchange Commission, Sonder CTO Satyen Pandya left his position on June 8.

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

Davidson and Banker said the company’s demand for business and travel services remains strong. Sonder predicts second-quarter revenue per available room to be around $160, up from $117 in the first quarter and $100 in the second quarter of 2021.

The company also forecasts that second-quarter revenue will increase by about 140 percent year-over-year, and full-year revenue will increase by about 100-110 percent compared to 2021. Sonder expects to achieve positive cash flow in 2023, but did not elaborate.

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

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