Sonder Posts 11% Revenue Drop in Q1

Key Points

• Revenue (GAAP) fell 11% year over year in the first quarter of 2025, reflecting a sharp contraction in bookable nights as the company executed its Portfolio Optimization Program.

• RevPAR rose 13% year-over-year in the first quarter of 2025, and occupancy rate increased by 7 percentage points year-over-year in the first quarter of 2025.

• Net loss (GAAP) widened 12% to $56.5 million in the first quarter of 2025, while Cash burn improved 89% year-over-year in the first quarter of 2025, and ongoing non-compliance with Nasdaq listing rules raises regulatory risk.

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Sonder (NASDAQ:SOND), the hospitality company known for its technology-driven apartments and boutique hotels, released its first quarter 2025 results on August 25, 2025. The company's revenue (GAAP) declined year over year in the first quarter of 2025, falling to $118.9 million from $133.5 million. Bookable nights dropped 21% year-over-year in the first quarter of 2025, underscoring the impact of its ongoing Portfolio Optimization Program aimed at streamlining its property base. Despite progress in operational performance—marked by higher occupancy and revenue per available room in the first quarter of 2025—Net loss (GAAP) increased to $56.5 million in the first quarter of 2025 from $50.5 million in the first quarter of 2024. Operating cash burn improved 89% year-over-year in the first quarter of 2025, but Sonder continued to face regulatory uncertainty due to delayed financial filings and ongoing non-compliance with Nasdaq listing requirements. Overall, the quarter reflected meaningful cost management progress amid ongoing challenges around scale, profitability, and compliance.

Understanding Sonder's Business and Strategic Priorities

Sonder operates a network of premium apartments and boutique hotel properties targeting leisure travelers, digital nomads, and business professionals. It offers design-forward units with digital self-service features in urban locations, spanning 40 cities across nine countries. By blending technology with hospitality, Sonder aims to create flexible, reliable stays for a tech-savvy customer base.

The company has recently focused on streamlining its portfolio, prioritizing operational efficiency and sustainable cash flow. Its key growth factors include managing geographic diversification, tailoring offerings to various traveler segments, and leveraging technological integration in both guest experience and internal operations. The Portfolio Optimization Program is central to these efforts, reducing the number of lower-performing units and concentrating resources on higher-yield properties.

Quarter Highlights: Portfolio Contraction, Operational Improvement, and Regulatory Pressure

Sonder's first quarter of 2025 reflected a pivot toward operational consolidation. Revenue (GAAP) fell 11% year-over-year in the first quarter of 2025 as bookable nights dropped sharply by 21%, a direct result of the Portfolio Optimization Program. This initiative reduced the total number of units available and bookable nights, trading scale for better property performance. Management stated the decline was “driven by the Company’s Portfolio Optimization Program,” The deliberate contraction reduced gross revenue year-over-year in the first quarter of 2025, though offset by gains in some efficiency metrics.

Despite the smaller footprint, Revenue per available room (RevPAR), a key industry metric indicating income from each room regardless of whether it is occupied, rose 13% to $139 in the first quarter of 2025. Occupancy rate climbed to 83% in the first quarter of 2025, up 7 percentage points from the prior year. These improvements were seen in RevPAR and occupancy rate.

Profitability and cash flow, however, remained a challenge. Net loss (GAAP) expanded 12% to $56.5 million in the first quarter of 2025. Adjusted EBITDA, a non-GAAP measure of core profitability before interest, taxes, and certain non-cash charges, stayed nearly flat at $(56.7) million in the first quarter of 2025. On the positive side, Net cash used in operating activities (GAAP) fell by 89% year-over-year in the first quarter of 2025. Adjusted free cash flow (non-GAAP) improved by 76% to $(6.9) million in the first quarter of 2025.

During the period, Sonder also advanced its technology integration and distribution strategy. A key development, completed after the quarter ended, was the full rollout of Sonder’s properties on Marriott digital platforms under the new ‘Sonder by Marriott Bonvoy’ collection. Management noted that all Sonder properties are now bookable on Marriott’s digital channels and participate in Marriott’s loyalty program, though the benefits of this change are not reflected in the current quarter’s figures.

Regulatory and compliance risks intensified for the company. Sonder was notified by Nasdaq that it remains non-compliant with listing rules due to its failure to timely file required financial statements. This follows earlier delays with its annual 10-K and first quarter filings. Sonder must update Nasdaq with its compliance plan by September 4, 2025, or risk potential delisting from the exchange. Management stated, “the Company can provide no assurances as to timing, the Company will continue to work diligently to complete and file the Q2 2025 Form 10-Q as soon as practicable.”

Business Outlook and Investor Considerations

Sonder’s leadership did not provide forward financial guidance for the upcoming quarter or the full fiscal year. Management continues to focus on operational performance. No changes to guidance or explicit forecasts were included in the report.

Investors should closely monitor the company’s ongoing developments. Additionally, Sonder’s regulatory challenges and high leverage—including more than $900 million in non-current lease obligations and a substantial portion of restricted cash—remain key risk factors.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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