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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 001-39907
___________________________________
SONDER HOLDINGS INC.
___________________________________
(Exact name of registrant as specified in its charter)
Delaware85-2097088
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
101 15th Street
San Francisco, California
94103
(Address of principal executive offices)(Zip Code)
(617) 300-0956
(Registrant’s telephone number, including area code)
___________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per share
SOND
The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share
SONDW
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  No 
The registrant had 218,058,524 shares of common stock outstanding as of November 4, 2022.


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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or our expected future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations.
Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
•    our plans to achieve positive quarterly Free Cash Flow within 2023 without additional fundraising and to target “capital light” lease signings, as part of our Cash Flow Positive Plan announced on June 9, 2022;
•    our financial, operating and growth forecasts and projections;
•    expectations for our business, revenue, expenses, operating results, and financial condition;
•    our ability to achieve or maintain profitability in the future;
•    trends in the travel and hospitality industries, including the anticipated timing and nature of any travel recovery;
•    our pricing and revenue management strategies, pricing and occupancy forecasts and anticipated trends, and expectations about demand elasticity;
•    our expectations concerning future transaction structures and the anticipated rent, rent abatement, capital expenditure provisions, and other terms of our future leases;
•    potential ancillary revenue opportunities and our ability to improve our revenue management capabilities;
•    anticipated capital expenditure obligations, including expectations for real estate owners’ funding of capital expenditures and other pre-opening costs at our leased properties;
•    the expected adequacy of our capital resources, and the anticipated use of proceeds from any financings;
•    trends in corporate travel and the potential for additional group and corporate travel revenue;
•    anticipated occupancy rates and expectations about guests’ average length of stay;
•    our ability to anticipate and satisfy guest demands, including through the introduction of new features, amenities or services;
•    expectations about our geographic market mix and product mix between hotels and apartments, and their impact on our financial results;
•    our plans to roll out additional features, amenities and technologies, and our beliefs about the positive impact of our technology investments on our brand and financial results;
•    our future competitive advantages and anticipated differentiation in cost structure and guest experience compared to other accommodation providers;
•    expectations for increased cost efficiencies and technological improvements;
•    expectations and plans for expanding in existing and new markets and accommodation categories;
•    the anticipated growth in our portfolio of Live Units and Contracted Units, including the anticipated scope and timing of any removals of units from our portfolio;
•    expectations about our relationships with third-party distribution channels and indirect channels, and the percentage of future revenue attributable to bookings through indirect channels;
•    anticipated seasonality and other variations in our results of operations from period-to-period, including statements about anticipated Revenue per Available Room (“RevPAR”) in specified quarters;
•    the anticipated effects of the COVID-19 pandemic or other public health crises;
•    our ability to continue meeting the listing standards of Nasdaq;
•    our assessments and beliefs regarding the timing and outcome of pending legal proceedings and any liability that we may incur as a result of those proceedings;
•    our assessments and estimates that determine our effective tax rate and regarding any tax-related audits or other tax proceedings; and
•    other expectations, beliefs, plans, strategies, anticipated developments, and other matters that are not historical facts.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
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You should not place undue reliance on our forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties, and other factors, many of which are beyond our control. Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.
For a discussion of our risk factors, see the section entitled “Risk Factors” herein. Additional factors that could cause results or performance to materially differ from those expressed in our forward-looking statements are detailed in other filings we may make with the Securities and Exchange Commission (“SEC”), copies of which are available from us at no charge. Please consider our forward-looking statements in light of those risks as you read this report. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SONDER HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share information)
(Unaudited)
September 30,
2022
December 31,
2021
Assets
Current assets:
Cash$317,324 $69,726 
Restricted cash1,131 215 
Accounts receivable, net of allowance of $1,194 and $4,127 at September 30, 2022 and December 31, 2021, respectively
5,658 4,638 
Prepaid rent 2,957 
Prepaid expenses7,530 5,029 
Other current assets10,435 16,416 
Total current assets342,078 98,981 
Property and equipment, net35,469 27,461 
Operating lease right-of-use ("ROU") assets1,139,713  
Other non-current assets15,272 22,037 
Total assets$1,532,532 $148,479 
Liabilities, mezzanine equity, and stockholders’ equity (deficit)
Current liabilities:
Accounts payable$9,236 $19,096 
Accrued liabilities16,504 19,557 
Sales tax payable14,368 8,412 
Deferred revenue49,431 18,811 
Current portion of long-term debt 13,116 
Convertible notes 184,636 
Current operating lease liabilities146,550  
Other current liabilities2,349  
Total current liabilities238,438 263,628 
Non-current operating lease liabilities1,082,412  
Deferred rent 66,132 
Long-term debt, net166,707 10,736 
Other non-current liabilities5,844 3,906 
Total liabilities1,493,401 344,402 
Commitments and contingencies (Note 10)
Mezzanine equity:
Redeemable convertible preferred stock 518,750 
Exchangeable preferred stock 49,733 
Total mezzanine equity 568,483 
Stockholders’ equity (deficit):
Common stock21 1 
Additional paid-in capital930,588 43,106 
Cumulative translation adjustment19,216 7,299 
Accumulated deficit(910,694)(814,812)
Total stockholders’ equity (deficit)39,131 (764,406)
Total liabilities, mezzanine equity, and stockholders’ equity (deficit)$1,532,532 $148,479 
See accompanying notes to unaudited condensed consolidated financial statements.
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SONDER HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share information)
(Unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2022202120222021
Revenue$124,526 $67,454 $326,314 $146,281 
Costs and operating expenses:
Cost of revenue (excluding depreciation and amortization)76,884 52,402 229,967 135,352 
Operations and support55,586 36,592 157,856 96,904 
General and administrative33,016 21,694 101,274 78,458 
Research and development6,936 5,443 22,649 12,828 
Sales and marketing13,372 6,724 35,247 14,123 
Restructuring and other charges  4,033  
Total costs and operating expenses185,794 122,855 551,026 337,665 
Loss from operations(61,268)(55,401)(224,712)(191,384)
Interest expense, net4,112 13,279 16,696 29,628 
Change in fair value of SPAC Warrants1,305  (36,329) 
Change in fair value of Earn Out liability2,223  (94,299) 
Change in fair value of share-settled redemption feature and gain on conversion of convertible notes  (29,512) 
Other expense (income), net5,175 (4,229)14,050 (4,164)
Total non-operating expenses (income), net12,815 9,050 (129,394)25,464 
Loss before income taxes(74,083)(64,451)(95,318)(216,848)
Provision for income taxes416 133 564 226 
Net loss$(74,499)$(64,584)$(95,882)$(217,074)
Less: Net loss attributable to convertible and exchangeable preferred stockholders  (3,886) 
Net loss attributable to common stockholders$(74,499)$(64,584)$(91,996)$(217,074)
Basic net loss per common share$(0.35)$(5.29)$(0.45)$(18.92)
Diluted net loss per common share$(0.35)$(5.29)$(0.45)$(18.92)
Other comprehensive loss:
Net loss$(74,499)$(64,584)$(95,882)$(217,074)
Change in foreign currency translation adjustment4,833 (1,120)11,916 1,714 
Comprehensive loss $(69,666)$(65,704)$(83,966)$(215,360)
See accompanying notes to unaudited condensed consolidated financial statements.
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SONDER HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND
STOCKHOLDERS’ EQUITY (DEFICIT)
Nine months ended September 30, 2022
(In thousands, except share information)
(Unaudited)

Redeemable
Convertible Preferred
Stock
Exchangeable
Preferred Stock
Common StockExchangeable
Series AA Stock
Post-Combination Exchangeable Common StockAdditional
Paid-in
Capital
Accumulated
Translation
Adjustment
Accumulated
Deficit
Total
Stockholders’
Equity (Deficit)
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 202175,767,082 $518,750 12,570,228 $49,733 8,684,246 $1 9,421,190 $  $ $43,106 $7,299 $(814,812)$(764,406)
Retroactive adjustment to reflect the exchange ratio due to business combination35,504,342 — 5,890,381 — 4,067,416 — 4,414,740 —  — — — — — 
Balance at December 31, 2021, as adjusted
111,271,424 $518,750 18,460,609 $49,733 12,751,662 $1 13,835,930 $  $ $43,106 $7,299 $(814,812)$(764,406)
Exercise of common stock options— — — — 362,943 — — — — — 873 — — 873 
Conversion of Sonder Legacy Warrants from liabilities to equity— — — — — — — — — — 2,111 — — 2,111 
CEO promissory note settlement— — — — (2,725,631)— — — — — — — — — 
Conversion of Sonder Legacy Warrants— — — — 155,239 — — — — — 1,243 — — 1,243 
Conversion of convertible note— — — — 19,017,105 1 — — — — 159,172 — — 159,173 
Conversion of preferred stock(111,271,424)(518,750)— — 111,271,424 11 — — — — 518,750 — — 518,761 
Conversion of exchangeable stock— — (18,460,609)(49,733)— — (13,835,930)— 32,296,539 — 49,733 — — 49,733 
Issuance of common stock in connection with business combination and PIPE offering— — — — 43,845,835 7 — — — — 267,355 — — 267,362 
Assumption of SPAC Warrants upon consummation of business combination— — — — — — — — — — (38,135)— — (38,135)
Earn Out liability recognized upon consummation of business combination— — — — — — — — — — (98,117)— — (98,117)
Issuance of Delayed Draw Warrants— — — — — — — — — — 5,598 — — 5,598 
Stock-based compensation— — — — — — — — — — 6,680 — — 6,680 
Components of comprehensive loss:— — — — — — — — — — — — — 
Net income— — — — — — — — — — — — 22,392 22,392 
Change in cumulative translation adjustment— — — — — — — — — — — 1,999 — 1,999 
Balance at March 31, 2022 $  $ 184,678,577 $20  $ 32,296,539 $ $918,369 $9,298 $(792,420)$135,267 

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SONDER HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND
STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
Nine months ended September 30, 2022 (continued)
(In thousands, except share information)
(Unaudited)

Redeemable
Convertible Preferred
Stock
Exchangeable
Preferred Stock
Common StockExchangeable
Series AA Stock
Post-Combination Exchangeable Common StockAdditional
Paid-in
Capital
Accumulated
Translation
Adjustment
Accumulated
Deficit
Total
Stockholders’
Equity (Deficit)
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance at March 31, 2022 $  $ 184,678,577 $20  $ 32,296,539 $ $918,369 $9,298 $(792,420)$135,267 
Exercise of common stock options— — — — 375,891 — — — — — 574 — — 574 
Vesting of restricted stock units — — — — 29,742 — — — — — 57 — — 57 
Conversion of exchangeable stock— — — — 4,259,343 — — — (4,259,343)— — — — — 
Stock-based compensation— — — — — — — — — — 5,054 — — 5,054 
Components of comprehensive loss:
Net loss— — — — — — — — — — — — (43,775)(43,775)
Change in cumulative translation adjustment— — — — — — — — — — — 5,085 — 5,085 
Balance at June 30, 2022 $  $ 189,343,553 $20  $ 28,037,196 $ $924,054 $14,383 $(836,195)$102,262 
Exercise of common stock options— — — — 159,329 — — — — — 129 — — 129 
Vesting of restricted stock units— — — — 503,742 — — — — —  — —  
Conversion of exchangeable stock— — — — 7,203,032 1 — — (7,203,032)— — — — 1 
Stock-based compensation— — — — — — — — — — 6,405 — — 6,405 
Components of comprehensive loss:— — — — — — — — — — — — — — 
Net loss— — — — — — — — — — — — (74,499)(74,499)
Change in cumulative translation adjustment— — — — — — — — — — — 4,833 — 4,833 
Balance at September 30, 2022 $  $ 197,209,656 $21  $ 20,834,164 $ $930,588 $19,216 $(910,694)$39,131 

See accompanying notes to unaudited condensed consolidated financial statements.
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SONDER HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND
STOCKHOLDERS’ EQUITY (DEFICIT) (continued)
Nine months ended September 30, 2021
(In thousands, except number of shares and par amount information)
(unaudited)

Redeemable
Convertible Preferred
Stock
Exchangeable
Preferred Stock
Common StockExchangeable
Series AA Stock
Post-Combination Exchangeable Common StockAdditional
Paid-in
Capital
Accumulated
Translation
Adjustment
Accumulated
Deficit
Total
Stockholders’
Deficit
SharesAmountSharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 202075,664,679 $517,730 12,579,755 $49,733 7,169,758 $1 9,437,358 $  $ $13,898 $5,666 $(520,425)$(500,860)
Retroactive adjustment to reflect the exchange ratio due to business combination35,456,366 — 5,894,873 — 3,359,582 — 4,422,311 —  — — — — — 
Balance at December 31, 2020, as adjusted
111,121,045 $517,730 18,474,628 $49,733 10,529,340 $1 13,859,669 $  $ $13,898 $5,666 $(520,425)$(500,860)
Issuance of Series E Convertible Preferred Stock136,390 1,020 — — — — — — — — — — — — 
Exercise of common stock options— — — — 379,462 — — — — — 746 — — 746 
Stock-based compensation— — — — — — — — — — 14,153 — — 14,153 
Components of comprehensive loss:— — — — — — — — — — — — — 
Net loss— — — — — — — — — — — — (78,541)(78,541)
Change in cumulative translation adjustment— — — — — — — — — — — 1,145 — 1,145 
Balance at March 31, 2021111,257,435 $518,750 18,474,628 $49,733 10,908,802 $1 13,859,669 $  $ $28,797 $6,811 $(598,966)$(563,357)
Exercise of common stock options— — — — 938,128 — — — — — 1,377 — — 1,377 
Exercise of common stock warrants— — — — 82,352 — — — — — 120 — — 120 
Stock-based compensation— — — — — — — — — — 2,448 — — 2,448 
Components of comprehensive loss:
Net loss— — — — — — — — — — — — (73,949)(73,949)
Change in cumulative translation adjustment— — — — — — — — — — — 1,689 — 1,689 
Balance at June 30, 2021111,257,435 $518,750 18,474,628 $49,733 11,929,282 $1 13,859,669 $  $ $32,742 $8,500 $(672,915)$(631,672)
Exchange of Series AA stock to common stock— — — — 23,744 — (23,744)— — — — — — — 
Exercise of common stock options— — — — 489,014 —