Sonder is laying off approximately 100 employees, or 14 percent of the firm’s corporate workforce, according to a March 1 filing with the Securities and Exchange Commission.
These cuts represent Sonder’s second round of significant layoffs since the Canadian-founded travel tech and hospitality firm went public on the Nasdaq early last year via special purpose acquisition company (SPAC). Amid the market downturn, Sonder previously restructured its operations in June 2022, shedding 21 percent of corporate roles and seven percent of frontline roles, including its CTO.
Sonder’s latest staff reduction comes as the firm looks to become cash flow positive this calendar year.
The company’s latest staff reduction comes as Sonder looks to become cash flow positive this calendar year. As Sonder noted in its Q4 2022 letter to shareholders, the firm’s focus “remains on reaching its first quarter of positive free cash flow in 2023.” The company said it plans to do this “without additional fundraising, while keeping a robust cash cushion.”
Sonder said it made progress towards this goal in 2022, cutting its burn in half from Q1 to Q4, and doubling its annual revenue. “Both are in line with the guidance we gave in June 2022 when we pivoted our focus from hypergrowth to positive cash flow,” stated Sonder co-founder and CEO Francis Davidson in the letter.
Sonder, which competes with the likes of Airbnb, leases and manages an array of short-term rental units across 10 countries and three continents. Now based in the United States (US), Sonder has strong Canadian roots. The company was founded in Montréal in 2012 by Martin Pecard, Lucas Pellan, and Davidson under the name Flatbook. In search of international investors, Sonder moved its headquarters to San Francisco two years later and incorporated in the US. But in recent years, Sonder has begun to expand its presence in Montréal once more.
Amid a SPAC boom fuelled by favourable public market conditions, Sonder’s SPAC deal with California-based SPAC Gores Metropoulos II was first announced in April 2021. The company initially sought to raise $650 million in cash proceeds at an enterprise value of $2.2 billion. But in late 2021, the firm scaled down its valuation to $1.9 billion in light of market conditions.
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As part of the deal, Sonder secured approximately $310 million in private investment in public equity capital and $165 million in delayed draw notes. The company was given access to up to $450 million in cash through Gore Metropoulos II’s trust account.
Sonder began trading on the Nasdaq in January 2022 as ‘SOND’ at $8.95 per share. But since then, Sonder’s stock price has nosedived more than 90 percent amid the market downturn to $0.88 per share at time of publication.
Though Sonder and the travel industry that it serves was hit hard by the COVID-19 pandemic, demand has since rebounded, and Sonder saw its revenue increase 56 percent year-over-year to $135 millon in Q4 2022.
Sonder expects its latest layoffs will cost the company $2 million to $3 million during the first quarter of 2023, and lead to $10 million in annualized cost savings.
Feature image courtesy Sonder.