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~~March 3031, ~~2024~~2025


☐			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)


Delaware						85-2097088
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
447 Sutter St. Suite 405, #542 San Francisco, California						94108
(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 class	Trading 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 20 whole warrants exercisable for one share of Common Stock at an exercise price of $230.00 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 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 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.


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 1113,~~585~~308,~~625~~481 shares of common stock outstanding as of ~~February~~August 1020, 2025.

Table of Contents

TABLE OF CONTENTS

			Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements			5
Condensed Consolidated Balance Sheets (unaudited)			5
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)			6
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)			6
Condensed Consolidated Statements of Cash Flows (unaudited)			7
Condensed Consolidated Statements of Stockholders’ Deficit (unaudited)			8
Notes to the Condensed Consolidated Financial Statements (unaudited)			10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			3437
Item 3. Quantitative and Qualitative Disclosures About Market Risk			52
Item 4. Controls and Procedures			5253
PART II - OTHER INFORMATION
Item 1. Legal Proceedings			5456
Item 1A. Risk Factors			5456
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities			5458
Item 3. Defaults Upon Senior Securities			5458
Item 4. Mine Safety Disclosures			5458
Item 5. Other Information			5458
Item 6. Exhibits			5559
SIGNATURES			5761

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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 focus on achieving positive and sustainable adjusted free cash flow (“Adjusted FCF”);

• our ~~financial, operating and growth~~ forecasts and projections, including our ~~focus on~~ cost-saving ~~reductions~~initiatives, ~~our~~restructuring ~~anticipated~~initiatives, ~~reductions~~portfolio inoptimization ~~cash burn~~program, and ~~the~~Cash ~~estimated~~Flow ~~annualized~~Positive ~~cost savings from reductions in force and our portfolio optimization program~~Plan;

• expectations for our business, revenue, expenses, results of operations, financial condition, and cash flows;

•our license agreement ~~(the “Marriott Agreement”)~~ with Marriott International, Inc. and Global Hospitality Licensing S.À R.L (together, “Marriott”), ~~including~~ (the ~~timing~~“Marriott ~~of the integration of our properties~~Agreement”), the anticipated benefits of the ~~agreement~~Marriott Agreement, and other plans and expectations related to the Marriott relationship;

•our expectations concerning future transaction structures and the anticipated rent, rent abatement, capital expenditure provisions, and other terms of our future leases;

•the expected adequacy of our capital resources, the availability of future financing or other capital resources, and the anticipated use of proceeds from any financings;

•management’s conclusion regarding its substantial doubt about the Company’s ability to continue as a going concern, and the related mitigation plans, including any impact on our key stakeholder relationships;

•our ~~portfolio~~ability ~~optimization~~to ~~program,~~enter ~~including~~into ~~lease~~satisfactory ~~renegotiation~~leases ~~efforts,~~or ~~potential~~renew ~~lease~~existing ~~amendments,~~properties ~~and the scope and timing of property exits, and their potential effects~~ on ~~our~~satisfactory ~~portfolio, results of operations, and cash flow, including any anticipated cost savings~~terms;

• ~~our~~trends ~~ability~~in tothe ~~achieve~~hospitality, orreal ~~maintain~~estate, ~~profitability~~and intravel ~~the future~~industries;

• ~~trends~~our inability ~~the~~to ~~travel~~achieve our financial, operating, and ~~hospitality~~growth ~~industries~~forecasts, and to predict and plan for risks and challenges;

• our ~~pricing~~ability ~~and~~to ~~revenue~~achieve ~~management~~or ~~strategies,~~maintain ~~pricing~~profitability ~~and~~in ~~occupancy~~the ~~forecasts and anticipated trends, and expectations about demand elasticity~~future;

• our ~~expectations~~relationships ~~concerning~~with ~~future transaction structures and the anticipated rent, rent abatement, capital expenditure provisions, and other terms of our future leases~~landlords;

• our portfolio optimization program, including lease renegotiation efforts, potential ~~ancillary~~lease ~~revenue~~amendments ~~opportunities~~and terminations, and ~~our~~the ~~ability~~scope toand ~~improve~~timing of property exits, and their potential effects on our ~~revenue~~portfolio, ~~management~~results ~~capabilities~~of operations, and cash flow, including any anticipated cost savings;

• ~~anticipated~~our ~~capital~~pricing ~~expenditure~~and ~~obligations,~~revenue ~~including~~management ~~expectations~~strategies, ~~for~~pricing ~~real~~and ~~estate~~occupancy ~~owners’~~forecasts ~~funding~~and ofanticipated ~~capital~~trends, ~~expenditures~~ and ~~other~~expectations ~~pre-opening~~about ~~costs~~demand ~~at our leased properties~~elasticity;

• ~~expectations about the adequacy of~~ our ~~capital~~efforts ~~resources,~~to ~~the~~expand ~~availability~~globally ~~of future financing or other capital resources,~~ and ~~the~~in ~~anticipated~~jurisdictions ~~use~~where ofwe ~~proceeds~~do ~~from~~not ~~any~~currently ~~financings~~operate;

• ~~trends~~our incompetitive ~~corporate~~advantage ~~travel~~ and ~~the~~anticipated ~~potential~~differentiation ~~for~~in ~~additional~~cost ~~group~~structure and ~~corporate~~guest ~~travel~~experience ~~revenue~~compared to other accommodation providers;

• ~~anticipated occupancy rates and~~ expectations about ~~guests’~~our ~~average~~distinctive ~~length~~type of ~~stay~~hospitality service;

• our ability to anticipate and satisfy guest demands, including through the introduction of new features, amenities, or services;

• expectations about our ~~geographic~~relationships ~~market~~with ~~mix~~third-party ~~and~~distribution ~~product~~channels ~~mix~~and ~~between~~indirect ~~hotels~~channels, and ~~apartments,~~the ~~and~~percentage ~~their~~of ~~impact~~future onrevenue ~~our~~attributable ~~financial~~to ~~results~~bookings through indirect channels;

•~~expectations~~our ~~about~~revenue, ~~employee~~expenses, ~~relations~~operating results, and ~~our~~cash ~~ability~~flows, toas ~~attract~~well ~~and~~as ~~retain~~our ~~qualified~~key ~~personnel~~operating metrics;

• our ~~plans~~reputation ~~to roll out additional features, amenities~~ and ~~technologies, and our beliefs about~~ the ~~positive~~strength ~~impact~~ of our ~~technology investments on our~~ brand ~~and financial results~~;

• our ~~competitive~~assessments ~~advantage~~and beliefs regarding the timing and ~~anticipated~~outcome ~~differentiation~~of inpending ~~cost~~legal ~~structure~~proceedings and ~~guest~~any ~~experience~~liability ~~compared~~that towe ~~other~~may ~~accommodation~~incur ~~providers~~as a result of those proceedings;

• ~~expectations~~changes ~~for~~in ~~increased~~our ~~cost~~executive ~~efficiencies~~management and ~~technological~~expectations ~~improvements~~about employee relations and our ability to attract, retain, motivate, or integrate qualified personnel;

• ~~expectations~~our ~~and~~efforts ~~plans~~to ~~for~~remediate ~~expanding~~material weaknesses in ~~existing~~our ~~and~~internal ~~new~~controls ~~markets~~over ~~and~~financial ~~accommodation categories~~reporting;

• ~~the anticipated growth in~~ our ~~portfolio~~ability ~~of units that are available for guests~~ to ~~book~~produce ~~(“Live~~timely ~~Units”)~~ and ~~units~~accurate ~~for~~financial ~~which~~statements weor ~~have~~comply ~~signed~~with ~~real~~applicable ~~estate contracts but which are not yet available for guests to book (“Contracted Units”), including the anticipated scope and timing of any removals of units from our portfolio~~regulations;

• ~~expectations about~~ our ~~relationships~~ability ~~with~~to ~~third-party~~meet ~~distribution channels~~ and ~~indirect~~continue ~~channels,~~meeting ~~and~~ the ~~percentage~~listing standards of ~~future~~The ~~revenue~~Nasdaq ~~attributable~~Stock toMarket ~~bookings~~LLC ~~through indirect channels~~(“Nasdaq”);

•our relationships with third-party services and technologies;

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• ~~anticipated~~expectations ~~seasonality~~about ~~and other variations in~~ our ~~results~~geographic ofmarket ~~operations~~mix ~~from~~and ~~period-to-period,~~product ~~including~~mix ~~statements~~between ~~about~~hotels ~~anticipated~~and ~~Revenue~~apartments, ~~per~~and ~~Available~~their ~~Room~~impact ~~(“RevPAR”)~~on inour ~~specified~~financial ~~quarters~~results;

• our plans to roll out additional features, amenities and technologies, and our beliefs about the ~~anticipated~~positive ~~effects~~impact of ~~public~~our ~~health~~technology ~~crises~~investments on our brand and financial results;

• our ~~ability~~assessments toand ~~continue~~estimates ~~meeting~~that ~~the~~determine ~~listing~~our ~~standards~~effective oftax ~~Nasdaq~~rate and regarding any tax-related audits or other tax proceedings;

• ~~our assessments and beliefs regarding~~ the ~~timing~~anticipated ~~and~~ratio ~~outcome~~ of ~~pending~~Occupied ~~legal~~Nights ~~proceedings~~to ~~and~~Bookable ~~any~~Nights ~~liability~~(“Occupancy ~~that~~Rate”) weand ~~may~~expectations ~~incur~~about asguests’ aaverage ~~result~~length of ~~those proceedings~~stay;

• the anticipated growth in our ~~assessments~~portfolio ~~and~~of ~~estimates~~units that ~~determine~~are ~~our~~available ~~effective~~for ~~tax~~guests ~~rate~~to book (“Live Units”) and ~~regarding~~units ~~any~~for ~~tax-related~~which ~~audits~~we orhave ~~other~~signed ~~tax~~real ~~proceedings;~~estate contracts but which are not yet available for guests to book (“Contracted Units”), including the anticipated scope and timing of any removals of units from our portfolio;

• anticipated seasonality and other ~~expectations,~~variations ~~beliefs,~~in ~~plans,~~our ~~strategies~~results of operations from period-to-period, including statements about anticipated ~~developments,~~Revenue ~~and~~per ~~other~~Available ~~matters~~Room ~~that~~(“RevPAR”) ~~are~~in ~~not~~specified ~~historical~~periods; ~~facts.~~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.

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.

You should note that we may announce material information to our investors using our investor relations website (https://investors.sonder.com/), filings with the Securities and Exchange Commission (the “SEC”), press releases, public conference calls and webcasts. We use these channels, as well as social media, to communicate with our investors. It is possible that the information that we post on these channels could be deemed to be material information. We therefore encourage investors to visit these websites from time to time. The information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this filing are intended to be inactive textual references only.

For a discussion of our risk factors, see the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2023~~2024 (the “Annual Report”), which is incorporated by reference into this Quarterly Report on Form 10-Q, and our subsequent filings with the SEC. Additional factors that could cause results or performance to ~~materially~~ differ materially from those expressed in our forward-looking statements are detailed in other filings we may make with the 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.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

SONDER HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands)

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	2623,~~957~~329	$	9520,~~763~~786
Restricted cash	4843,~~942~~191		4051,~~734~~268
Accounts receivable, net of allowance of $6,688 and $6,196 at September 30, 2024 and December 31, 2023, respectively	10,182		7,999
Accounts receivable, net of allowance of $17,155 and $14,587 at March 31, 2025 and December 31, 2024, respectively	8,526		13,918
Prepaid expenses	43,~~513~~646		54,~~366~~141
Other current assets	159,~~527~~785		119,~~345~~733
Total current assets	~~106~~88,~~121~~477		~~161~~99,~~207~~846
Property and equipment, net	104,~~659~~383		225,~~775~~933
Operating lease right-of-use (“ROU”) assets	1920,~~086,820~~727		1,~~322~~013,~~135~~854
Other non-current assets	1419,~~436~~142		1517,~~150~~544
Total assets	$	1,~~218~~032,~~036~~729	$	1,~~521~~137,~~267~~177
Liabilities, mezzanine equity and stockholders’ deficit
Current liabilities:
Accounts payable	$	3349,~~508~~217	$	2333,~~560~~724
Accrued liabilities	3934,~~097~~463		3832,~~499~~621
Taxes payable	2822,~~279~~890		1422,~~005~~224
Deferred revenue	74101,~~834~~068		6171,~~971~~729
Other current liabilities	~~126~~7,~~589~~155		~~127~~5,513
Current portion of long-term debt	1,000		~~168~~1,~~710~~000
Current operating lease liabilities	~~169~~168,~~974~~751		~~199~~171,~~364~~736
Total current liabilities	~~473~~384,~~281~~544		~~506~~338,~~236~~547
Non-current operating lease liabilities	1907,~~070,996~~266		1,~~389~~009,~~580~~169
Long-term debt, net	~~209~~226,~~851~~161		1217,~~500~~236
Other non-current liabilities	~~850~~8,070		~~652~~8,113
Total liabilities	1,~~754~~526,~~978~~041		1,~~897~~573,~~968~~065
Commitments and contingencies (Note 12)
Mezzanine equity:
Series A redeemable convertible preferred stock: $0.0001 par value; 250,000,000 shares authorized, 14,692,000 shares issued and outstanding	59,525		—
Series A redeemable convertible preferred stock: $0.0001 par value; 250,000,000 shares authorized at March 31, 2025 and December 31, 2024, 42,633,000 and 43,300,000 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively	163,434		162,907
Stockholders’ deficit:
Common stock	1		1
Additional paid-in capital	~~959~~978,~~501~~855		977,~~503~~112
Cumulative translation adjustment	~~343~~4,161		47,~~976~~360
Accumulated deficit	(1,~~556~~639,~~312~~763)		(1,~~359~~583,~~181~~268)
Total stockholders’ deficit	(~~596~~656,~~467~~746)		(~~376~~598,~~701~~795)
Total liabilities and stockholders’ deficit	$	1,~~218~~032,~~036~~729	$	1,~~521~~137,~~267~~177

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

COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands, except share data)

	Three months ended September 30,				Nine months ended September 30,
	Three months ended March 31,
	2024		2023		2024		2023
	2025		2024
Revenue	$	~~162~~118,~~114~~856	$	~~160~~133,~~896~~479	$	~~460,194~~	$	~~437,802~~
Costs and operating expenses:
Cost of revenue (excluding depreciation and amortization)	9296,~~991~~849		~~103~~100,~~374~~363		~~288,006~~		~~289,947~~
Operations and support	4538,~~292~~032		5049,~~376~~980		~~141,683~~		~~154,426~~
General and administrative	2926,~~731~~817		3024,~~548~~285		~~83,288~~		~~92,937~~
Research and development	43,~~427~~938		54,~~344~~671		~~13,491~~		~~17,289~~
Sales and marketing	2215,~~292~~322		2019,~~996~~249		~~63,113~~		~~54,894~~
Impairment loss	—		1,087		—		1,087
Integration costs	1,539		—
Restructuring and other charges	~~1,304~~—		122,592		~~3,896~~		~~2,119~~
Total costs and operating expenses	~~196~~182,~~037~~497		~~211~~201,~~737~~140		~~593,477~~		~~612,699~~
Loss from operations	(3363,~~923~~641)		(5067,~~841~~661)		~~(133,283)~~		~~(174,897)~~
Interest expense, net	9,~~256~~449		67,~~423~~323		~~24,595~~		~~18,285~~
Change in fair value of SPAC Warrants	24		(276)		7		(674)
Lease adjustment gains, net	(11,138)		(23,901)
Change in fair value of Earn Out Liability	11		(209)		(5)		(2,142)
Other income, net	(6,174)		(783)
Lease adjustment (gains), net	(555)		(139)		(95,579)		(8,576)
Total non-operating income, net	(7,863)		(17,361)
Loss on preferred stock issuance	59,490		—		59,490		—
Loss before income taxes	(55,778)		(50,300)
Change in fair value of forward contract	86,570		—		86,570		—
Provision for income taxes	717		187
Other (income) expense, net	(9,530)		915		(11,856)		1,762
Net loss	$	(56,495)	$	(50,487)
Total non-operating expense, net	145,266		6,714		63,222		8,655
Basic and diluted net loss per common share	$	(4.85)	$	(4.58)
Loss before income taxes	(179,189)		(57,555)		(196,505)		(183,552)
Other comprehensive loss:
Provision for income taxes	202		75		626		127
Net loss	$	(56,495)	$	(50,487)
Net loss	$	(179,391)	$	(57,630)	$	(197,131)	$	(183,679)
Change in foreign currency translation adjustment	(3,199)		(589)
Basic and diluted net loss per common share	$	(17.82)	$	(5.26)	$	(19.85)	$	(16.84)
Comprehensive loss	$	(59,694)	$	(51,076)
Other comprehensive loss:
Net loss	$	(179,391)	$	(57,630)	$	(197,131)	$	(183,679)
Change in foreign currency translation adjustment	(5,439)		3,547		(4,633)		(3,249)
Comprehensive loss	$	(184,830)	$	(54,083)	$	(201,764)	$	(186,928)

See accompanying notes to unaudited condensed consolidated financial statements.

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SONDER HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

	Nine months ended September 30,
	Three months ended March 31,
	2024		2023
	2025		2024
Cash flows from operating activities:
Net loss	$	(~~197~~56,~~131~~495)	$	(~~183~~50,~~679~~487)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	132,~~350~~591		184,~~908~~973
Stock-based compensation	62,~~402~~269		233,~~982~~009
Amortization of operating lease ROU assets	~~130~~49,~~630~~565		~~138~~47,~~768~~249
Impairment loss	—		1,087
Lease adjustment gains, net	(11,138)		(23,901)
Lease adjustment gains, net	(95,579)		(8,576)
Gain on foreign exchange	(2,678)		(219)
Gain on foreign exchange	(6,415)		(2,445)
Capitalization of paid-in-kind interest on long-term debt	7,975		6,432
Capitalization of paid-in-kind interest on long-term debt	21,435		20,418
Credit loss expense	2,568		(880)
Amortization of debt issuance costs	73		6
Amortization of debt discounts and issuance costs	1,200		699
Amortization of debt discounts	2,368		1,274
Other non-cash activities	(120)		228
Change in fair value of SPAC Warrants	7		(674)
Change in fair value of Earn Out Liability	(5)		(2,142)
Change in fair value of forward contracts	86,570		—
Loss on preferred stock issuance	59,490		—
Other operating activities	1,981		897
Changes in:
Accounts receivable, net	(32,~~341)~~931		~~(4,219)~~634
Prepaid expenses	~~1,088~~513		1,~~885~~148
Other current and non-current assets	(32,~~625)~~894		(291,867)
Accounts payable	915,~~309~~259		45,~~044~~319
Accrued liabilities	1,~~941~~752		(~~5,434~~82)
Taxes payable	14(3,~~116~~635)		12,~~013~~424
Deferred revenue	1229,~~938~~297		2520,~~728~~359
Operating lease ROU assets and operating lease liabilities, net	(~~146~~50,~~221~~686)		(~~103~~55,~~939~~495)
Other current and non-current liabilities	~~168~~1,585		~~590~~148
Net cash used in operating activities	(904,~~451~~353)		(7240,~~537~~309)
Cash flows from investing activities:
Purchase of property and equipment	(1,~~868~~219)		(~~11,319~~606)
Capitalization of internal-use software	(227)		(1,117)
Proceeds on the disposition of property and equipment	260		—
Net cash used in investing activities	(2,095)		(12,436)
Capitalization of internal-use software	—		(110)
Net cash used in investing activities	(959)		(716)
Cash flows from financing activities:
Repayment of debt	(~~761~~250)		(250)
Proceeds from debt financing	20,000		—
Net cash used in financing activities	(250)		(250)
Proceeds from issuance of debt	—		3,000
Effects of foreign exchange on cash	28		(344)
Payment of issuance costs	(1,644)		—
Net change in cash, cash equivalents, and restricted cash	(5,534)		(41,619)
Proceeds from preferred stock issuance	14,692		—
Cash, cash equivalents, and restricted cash at beginning of period	72,054		136,497
Proceeds from exercise of stock options and common stock warrants	—		8
Cash, cash equivalents, and restricted cash at end of period	$	66,520	$	94,878
Net cash provided by financing activities	32,287		2,758
Effects of foreign exchange on cash	(339)		262
Net change in cash, cash equivalents, and restricted cash	(60,598)		(81,953)
Cash, cash equivalents, and restricted cash at beginning of period	136,497		289,186
Cash, cash equivalents, and restricted cash at end of period	$	75,899	$	207,233

See accompanying notes to unaudited condensed consolidated financial statements.

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SONDER HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (Unaudited)

Three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025

(in thousands, except share data)

	Common Stock			Post-Combination Exchangeable Common Stock			AdditionalPaid-inCapital		AccumulatedTranslation Adjustment		AccumulatedDeficit		TotalStockholders’Deficit
	Shares	Amount		Shares	Amount
Balance at December 31, 2023	10,380,725	$	1	712,982	$	—	$	977,503	$	4,976	$	(1,359,181)	$	(376,701)
Balance at December 31, 2024	11,041,999	$	1	551,072	$	—	$	977,112	$	7,360	$	(1,583,268)	$	(598,795)
Vesting of restricted stock units	28,422	—		—	—		—		—		—		—
Conversion of exchangeable stock	113	—		(113)	—		—		—		—		—
Stock-based compensation	—	—		—	—		3,009		—		—		3,009
Vesting of restricted stock units, net of shares withheld for taxes	132,856	—		—	—		—		—		—		—
Preferred stock accretion to redemption value	—	—		—	—		3,239		—		—		3,239
Paid-in-kind dividend on preferred stock	—	—		—	—		(5,885)		—		—		(5,885)
Conversion of preferred stock	667,000	—		—	—		2,120		—		—		2,120
Stock-based compensation	—	—		—	—		2,269		—		—		2,269
Components of comprehensive loss:
Net loss	—	—		—	—		—		—		(5056,~~487~~495)		(5056,~~487~~495)
Change in cumulative translation adjustment	—	—		—	—		—		(~~589~~3,199)		—		(~~589~~3,199)
Balance at March 31, 2024	10,409,147	$	1	712,982	$	—	$	980,512	$	4,387	$	(1,409,668)	$	(424,768)
Balance at March 31, 2025	11,841,968	$	1	550,959	$	—	$	978,855	$	4,161	$	(1,639,763)	$	(656,746)
Conversion of exchangeable stock	161,910	—		(161,910)	—		—		—		—		—
Issuance of delayed draw warrants	—	—		—	—		1,488		—		—		1,488
Stock-based compensation	—	—		—	—		1,779		—		—		1,779
Components of comprehensive income (loss):
Net income	—	—		—	—		—		—		32,747		32,747
Change in cumulative translation adjustment	—	—		—	—		—		1,395		—		1,395
Balance at June 30, 2024	10,571,057	$	1	551,072	$	—	$	983,779	$	5,782	$	(1,376,921)	$	(387,359)
Stock-based compensation	—	—		—	—		1,614		—		—		1,614
Preferred stock accretion to redemption value	—	—		—	—		(25,892)		—		—		(25,892)
Common stock issuance for exercise of warrants	473,458	$	—	—	$	—	$	—	$	—	$	—	$	—
Components of comprehensive loss:
Net loss	—	—		—	—		—		—		(179,391)		(179,391)
Change in cumulative translation adjustment	—	—		—	—		—		(5,439)		—		(5,439)
Balance at September 30, 2024	11,044,515	$	1	551,072	$	—	$	959,501	$	343	$	(1,556,312)	$	(596,467)

See accompanying notes to unaudited condensed consolidated financial statements.

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SONDER HOLDINGS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (continued) (Unaudited)

Three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024

(in thousands, except share data)

	Common Stock			Post-Combination Exchangeable Common Stock			AdditionalPaid-inCapital		AccumulatedTranslation Adjustment		AccumulatedDeficit		TotalStockholders’Equity (Deficit)
	Shares	Amount		Shares	Amount
Balance at December 31, 2022	9,919,716	$	1	1,019,460	$	—	$	949,001	$	13,026	$	(1,063,513)	$	(101,485)
Balance at December 31, 2023	10,380,725	$	1	712,982	$	—	$	977,503	$	4,976	$	(1,359,181)	$	(376,701)
Exercise of common stock options	463	—		—	—		8		—		—		8
Vesting of restricted stock units	28,422	—		—	—		—		—		—		—
Vesting of restricted stock options	25,780	—		—	—		—		—		—		—
Stock-based compensation	—	—		—	—		3,009		—		—		3,009
Conversion of exchangeable stock	46,525	—		(46,525)	—		—		—		—		—
Stock-based compensation	—	—		—	—		10,800		—		—		10,800
Components of comprehensive loss:
Net loss	—	—		—	—		—		—		(8150,~~865~~487)		(8150,~~865~~487)
Change in cumulative translation adjustment	—	—		—	—		—		(~~3,413~~589)		—		(~~3,413~~589)
Balance at March 31, 2023	9,992,484	$	1	972,935	$	—	$	959,809	$	9,613	$	(1,145,378)	$	(175,955)
Balance at March 31, 2024	10,409,147	$	1	712,982	$	—	$	980,512	$	4,387	$	(1,409,668)	$	(424,768)
Exercise of common stock options	6	—		—	—		—		—		—		—
Vesting of restricted stock units	48,606	—		—	—		—		—		—		—
Conversion of exchangeable stock	9,892	—		(9,892)	—		—		—		—		—
Stock-based compensation	—	—		—	—		8,258		—		—		8,258
Components of comprehensive loss:
Net loss	—	—		—	—		—		—		(44,184)		(44,184)
Change in cumulative translation adjustment	—	—		—	—		—		(3,381)		—		(3,381)
Balance at June 30, 2023	10,050,988	$	1	963,043	$	—	$	968,067	$	6,232	$	(1,189,562)	$	(215,262)
Vesting of restricted stock units	2,474	—		—	—		—		—		—		—
Stock-based compensation	—	—		—	—		4,924		—		—		4,924
Components of comprehensive loss:	—	—		—	—		—		—		—		—
Net loss	—	—		—	—		—		—		(57,630)		(57,630)
Change in cumulative translation adjustment	—	—		—	—		—		3,547		—		3,547
Balance at September 30, 2023	10,053,462	$	1	963,043	$	—	$	972,991	$	9,779	$	(1,247,192)	$	(264,421)

See accompanying notes to unaudited condensed consolidated financial statements.

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SONDER HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Basis of Presentation

Nature of Operations

Sonder Holdings Inc., ~~(collectively~~together with its wholly owned subsidiaries (collectively, the “Company,” “we,” “us,” or “our”), provides short and long-term accommodations to travelers in various cities across North America, Europe, and the Middle East. ~~The~~We ~~units~~are ina ~~each~~leading ~~apartment~~global brand of premium, design-~~style~~forward ~~building~~apartments and ~~each~~intimate ~~hotel~~boutique ~~property~~hotels ~~are~~serving ~~selected~~the modern traveler. Launched in 2014, ~~designed~~Sonder offers inspiring, thoughtfully designed accommodations and ~~managed~~innovative, ~~directly~~tech-enabled byservice ~~the~~combined ~~Company.~~into one seamless experience.

On January 18, 2022, the Company consummated the previously announced business combination (the “Business Combination”) by and among Gores Metropoulos II, Inc. (“GMII”), two subsidiaries of GMII, and Sonder Operating Inc., a Delaware corporation formerly known as Sonder Holdings Inc. (“Legacy Sonder”) through a merger agreement (the “Merger Agreement”). Refer to Note 16, Business Combination, of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”) for details of the transaction.

Going Concern

The accompanying condensed consolidated financial statements are prepared in accordance with general accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a history of net losses and negative operating cash flows and expects to continue to incur additional losses in the future. The Company’s liquidity may be insufficient to meet its obligations for at least one year from the date of issuance of these financial statements, which raises substantial doubt about the Company’s ability to continue as a going concern.

As a result, management has concluded that there is substantial doubt, which is not alleviated, about the Company’s ability to continue as a going concern for at least one year from the date of issuance of these financial statements.

Management’s plans to address these conditions include: i) meeting the requirements and milestones described herein, to obtain additional funds through recent arrangements, including $15 million from the Marriott Agreement, ii) realizing improved operations, including anticipated improvements from integration through the Marriott Agreement, iii) renegotiating lease terms, including possible terminations, of certain properties, iv) completing the issuance and sale of approximately 28.6 million shares (the “Second Tranche”) of Series A Preferred Stock for cash consideration of approximately $28.6 million, and v) implementing cost-cutting initiatives. On November 21, 2024, the Company received $7.5 million of the referenced $15 million from the Marriott Agreement. Also in November 2024, the Company completed the sale and issuance of the Second Tranche of Series A Preferred Stock.

There can be no assurances of the Company’s ability to realize these plans. As a result, these conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the date of issuance of these financial statements.

Basis of Financial Statement Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”, “U.S. GAAP”, or “generally accepted accounting principles”). The condensed consolidated financial statements present the results of operations, financial position, and cash flows of the Company in accordance with consolidation accounting guidance. All intercompany balances and transactions have been eliminated in consolidation. InThe ~~the opinion of management, the accompanying~~ unaudited condensed consolidated ~~financial~~balance ~~statements~~sheet ~~contain~~as ~~all~~of ~~adjustments~~December 31, ~~including~~2024 ~~normal~~included ~~recurring~~herein ~~adjustments,~~was ~~necessary~~derived tofrom ~~present fairly~~ the ~~Company’s~~audited consolidated financial ~~position~~statements atas ~~September 30,~~of ~~2024~~that ~~and December 31~~date, ~~2023,~~but ~~results~~does ofnot ~~operations~~include ~~and~~all ~~comprehensive~~disclosures, ~~income~~including ~~(loss)~~certain ~~and~~notes ~~stockholders’~~required ~~deficit~~by ~~for~~GAAP ~~the~~on ~~three~~an ~~and~~annual ~~nine~~reporting ~~months~~basis. ~~ended~~In ~~September 30~~management’s opinion, ~~2024~~the ~~and~~unaudited ~~2023,~~condensed ~~and~~consolidated ~~cash~~financial ~~flows~~statements ~~for~~reflect ~~the~~all ~~nine~~normal ~~months~~recurring ~~ended~~adjustments ~~September 30,~~necessary ~~2024~~to ~~and~~present ~~2023.~~fairly ~~The~~the ~~Company’s~~balance ~~condensed~~sheets ~~consolidated~~and ~~results~~statements of operations and comprehensive ~~income (~~loss), ~~and~~ stockholders’ deficit ~~for the three and nine months ended September 30~~, ~~2024~~ and cash flows for the ~~nine~~interim ~~months ended September 30~~periods, ~~2024~~but are not necessarily indicative of the results of operations to be ~~expected~~anticipated for the full fiscal year or any future period.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes included in its Annual Report on Form 10-K for the year ended December 31, 2024, which was initially filed with the SEC on July 24, 2025.

The Company qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, and as a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act, and, as such, may take advantage of specified reduced reporting requirements and deferred accounting standards adoption dates, and is relieved of other significant requirements that are otherwise generally applicable to other public companies.

Notice of Delisting

On April 24, 2025, the Company received a notice (the “10-K Notice”) from Nasdaq notifying the Company that, because the Company was delinquent in filing the 2024 Form 10-K, the Company no longer complies with Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule”), which requires companies with securities listed on Nasdaq to timely file all required periodic reports with the SEC. On May 23, 2025, the Company received a notice (the “Q1 10-Q Notice” and together with the 10-K Notice, the “Notices”) from Nasdaq notifying the Company that, because the Company is delinquent in filing the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025, the Company continues to not comply with the Listing Rule. The Notices had no immediate effect on the listing or trading of the Company’s common stock or Public Warrants on the Nasdaq Global Select Market.

In accordance with Nasdaq’s listing rules, the Company had 60 calendar days after the 10-K Notice to submit a plan of compliance (the “Plan”) to Nasdaq demonstrating the Company’s ability to regain compliance with the Listing Rule and Nasdaq has the discretion to grant the Company up to 180 calendar days from the due date of the 2024 Form 10-K, or October 13, 2025, to regain compliance. The Company submitted the Plan on June 23, 2025. The filing of our Annual Report on Form 10-K on July 23, 2025 cured the filing deficiency described in the 10-K Notice and the filing of this Quarterly Report on Form 10-Q cures the filing deficiency described in the Q1 10-Q Notice.

The Company received a notice from Nasdaq on August 20, 2025 related to the Company’s delinquency in filing its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025.

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~~The~~Going Company qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, and as a “smaller reporting company” as defined in Rule 12b-2 under the Securities Exchange Act of 1934 (the “Exchange Act”), and, as such, may take advantage of specified reduced reporting requirements and deferred accounting standards adoption dates, and is relieved of other significant requirements that are otherwise generally applicable to other public companies.Concern

~~Marriott~~The ~~License~~accompanying condensed consolidated financial statements are prepared in accordance with general accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a history of net losses and negative operating cash flows and expects to continue to incur additional losses in the future. Although the Company continues to pursue a strategy to realize improved operations, including anticipated improvements from integration through the Marriott Agreement (as defined below), the timing of realization cannot be guaranteed to ensure liquidity is available when needed to meet the Company’s obligations. The Company’s liquidity may be insufficient to meet its obligations for at least one year from the date of issuance of these financial statements, which raises substantial doubt about the Company’s ability to continue as a going concern.

On August 13, 2024, the Company entered into a license agreement (the “Marriott Agreement”) with Marriott International, Inc. and Global Hospitality Licensing S.A R.L (together “Marriott”) whereby the CompanyManagement’s ~~portfolio~~plans ~~of properties is expected~~ to ~~join~~address the ~~Marriott~~substantial ~~system~~doubt ~~under~~about ~~a newly-created collection called “Sonder by Marriott Bonvoy.” Under~~ the ~~Marriott Agreement, the~~ Company’s ~~properties~~ability ~~will~~to ~~become~~continue ~~available~~as ~~for~~a ~~booking~~going ~~on Marriott’s digital platforms~~concern, ~~including~~as ~~Marriott.com~~described ~~and the Marriott Bonvoy mobile app~~above, ~~and~~include the ~~Company~~following ~~will also gain access to Marriott’s global sales and marketing capabilities and distribution platform.~~actions:

~~The~~•engaging ~~initial~~a ~~term~~financial ofadvisor the Marriott Agreement will expire 20 years after the Initial Onboarding Date (as defined in the Marriott Agreement), which is the date upon which the Company’s properties are integrated into the Marriott platform and systems, and is expected to beassist in ~~the~~identifying ~~first quarter of 2025. The Marriott Agreement provides for extensions for two consecutive five-year renewal terms~~ and ~~includes~~securing ~~other~~strategic ~~rights~~alternatives and ~~provisions~~financing ~~related to the term of the agreement.~~arrangements;

~~The~~•continuing ~~Company must comply with certain Marriott standards, including, among others, those related~~ to ~~data~~focus ~~privacy,~~on ~~cyber~~identifying ~~security, fire protection~~ and ~~life~~executing ~~safety,~~cost ~~third-party~~optimization ~~distributions and use of intellectual property~~initiatives, ~~and customary franchise terms, conditions and requirements, but our properties will otherwise generally follow the Company’s design, maintenance, renovation, and operating standards.~~

In•continuing ~~consideration~~to ofexecute ~~the~~our ~~services~~portfolio ~~and~~optimization ~~the~~program ~~license provided~~ to ~~the~~mitigate ~~Company~~losses byrelated ~~Marriott,~~to ~~beginning~~certain onunderperforming ~~the~~properties ~~Initial~~and ~~Onboarding~~to ~~Date,~~assess the Company’s ~~will~~portfolio ~~pay~~of ~~Marriott~~rents arelative ~~royalty fee that increases over the first few years, up~~ to acurrent ~~specified~~operations ~~maximum,~~ and ~~various~~existing ~~other~~market ~~fees,~~rents; ~~charges,~~ and ~~costs. The Company and Marriott will each pay its own technology and systems integration and launch costs.~~

~~Subject~~•improving toits ~~the~~financial ~~Company~~performance ~~providing~~through ~~Marriott with reasonably satisfactory evidence that~~ the ~~Company~~potential ~~has~~to ~~funded~~increase ~~the~~revenue ~~Holistic Capital Solution (as defined in the Marriott Agreement) and there being no monetary, bankruptcy related or exclusivity default~~ by ~~the~~integrating ~~Company under the Marriott Agreement, Marriott will provide the Company~~ with ~~$15 million of Key Money (as defined in the~~ Marriott’s ~~Agreement)~~commercial inengine ~~two~~and ~~tranches~~deliver bycosts ~~March 31, 2025~~savings. The Company received $7.5 million of Key Money on November 21, 2024. If the Marriott Agreement is terminated for any reason, the Company must reimburse Marriott, before the effective date of the termination, the Unamortized Key Money (as defined in the Marriott Agreement).

~~During~~There ~~the~~can ~~first~~be ~~two~~no ~~years~~assurances of the ~~Marriott~~Company’s ~~Agreement~~ability ~~term, Marriott has agreed not~~ to ~~open~~realize ~~any~~these ~~properties~~plans. ~~pursuant~~As ~~to an agreement for~~ a ~~Platform Transaction (as defined in the Marriott Agreement) with certain specified Company competitors~~result, ~~subject~~these toconditions ~~certain~~raise ~~exclusions.~~substantial ~~For~~doubt ~~the~~about ~~duration of~~ the ~~term, subject to standard terms and processes, Marriott has agreed that it will designate the~~ Company’s asability ~~an approved operator for the Apartments by Marriott Bonvoy brand worldwide. Also for the duration of the term, the Company has agreed not~~ to ~~open~~continue ~~any hotel, resort, other similar transient lodging product, including serviced-apartment hotels and lodging products that are structured~~ as a ~~“condominium~~going ~~hotel~~concern ~~project”,~~for ~~unless~~at ~~the~~least ~~Company~~one ~~first~~year ~~proposes that it be included under the Marriott Agreement and Marriott confirms it is restricted~~ from ~~being included, in which case,~~ the ~~exclusivity~~date ~~will~~of ~~not~~issuance ~~apply~~of sothese ~~long~~financial ~~as any third-party that the Company contracts with regarding such opening is not a Marriott Competitor (as defined in the Marriott Agreement)~~statements.

~~Following the five year anniversary of the~~ Marriott Agreement, the Company and Marriott will each have the right to terminate the agreement upon notice to the other party and payment of a termination fee and unamortized key money upon any transfer (or series of transfers) of: (i) 50% of more of the direct or indirect ownership interests in the Company to any Non-Controlled Person (as defined in the Marriott Agreement); (ii) 50% or more of the Company’s direct or indirect ownership interests in all of the Properties to any Non-Controlled Person; or (iii) the right to control the day-to-day management or operations of the Company or each Company party that owns, leases or operates a Property to any Non-Controlled Person.

Under the Marriott Agreement, Marriott agreed to provide the Company with $15.0 million of Key Money (as defined in the Marriott Agreement) in two tranches by March 31, 2025. The Company received $7.5 million of Key Money on November 21, 2024. As discussed in Note 15, Subsequent Events, on April 11, 2025, the Company received the remaining $7.5 million of Key Money, completing the $15.0 million investment.

~~Table~~On August 5, 2025, the Company amended the Marriott Agreement to, among other things, defer certain fees and other amounts owed to Marriott by the Company under the Marriott Agreement, for a period of ~~Contents~~up to 12 months.

Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company manages the credit risk associated with cash and cash equivalents by investing in lower risk money market funds and by maintaining operating accounts that are diversified among various institutions with good credit quality. The Company maintains cash accounts that, at times, exceed federally insured limits. The Company has not experienced any losses from maintaining cash accounts in excess of such limits. Management believes that the Company is not exposed to any significant risks on its cash and cash equivalent accounts.

Use of Estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expense during the reporting periods. Examples of management’s estimates and assumptions include, but are not limited to, the fair value of share-based awards, estimated useful life of long-lived assets, ~~bad-debt~~allowance ~~allowances~~for credit losses, valuation of intellectual property and intangible assets, contingent liabilities, valuation allowance for deferred tax assets, ROU asset impairment valuation of the preferred stock issuance and valuation of non-routine complex transactions, such as recognition of the Earn Out Liability, SPAC Warrants (each as defined below) and forward contracts, among others. These estimates are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from those estimates.

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Integration Costs

The Company defines integration costs as costs incurred to integrate under the Marriott Agreement. These include costs incurred to integrate the Company’s portfolio of properties under the Marriott system, costs incurred to comply with certain Marriott standards, technology and systems costs related to the integration and various launch costs.

Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in thousands):

	Nine months ended September 30,
	Three months ended March 31,
	2024		2023
	2025		2024
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	~~665~~164	$	~~746~~35
Cash paid for interest	$	~~2,054~~319	$	~~1,494~~401
Supplemental disclosures of non-cash investing and financing activities
Accrued purchases of property and equipment	$	34—	$	~~359~~73
Operating ROU assets obtained in exchange for operating lease liabilities, net of adjustments(1)	$	(~~108~~60,~~583~~063)	$	~~199~~(81,~~808~~886)
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents	$	2623,~~957~~329	$	~~166~~40,~~045~~761
Restricted cash	4843,~~942~~191		4154,~~188~~117
Cash, cash equivalents, and restricted cash at end of period	$	7566,~~899~~520	$	~~207~~94,~~233~~878

(1) Operating ROU assets declines and early lease termination gains are primarily related to the impact of lease terminations. ~~We undertook an initiative in 2024 to renegotiate or exit certain properties where there exists unfavorable lease terms. These lease terminations primarily occurred during the first half of 2024.~~

Reclassifications

Certain prior period amounts have been reclassified on our unaudited condensed consolidated ~~balance~~statements ~~sheets~~of operations and comprehensive income and statements of cash flows to conform with our current period presentation.

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Note 2. Recently Issued Accounting Standards

Recently Adopted Accounting Standards

The Company has not adopted any recent accounting pronouncements that are expected to have a material impact on its results of operations, financial position, or cash flows.

Recently Issued Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. Among other new disclosure requirements, ASU 2023-07 requires companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker. ASU 2023-07 will be effective for annual periods beginning on January 1, 2024 and interim periods beginning on January 1, 2025. ASU 2023-07 must be applied retrospectively to all prior periods presented in the financial statements. We have evaluated the disclosure impact of ASU 2023-07; the standard will not have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires companies to disclose additional information about income taxes paid. ASU 2023-09 will be effective for annual periods beginning January 1, 2025 and will be applied on a prospective basis with the option to apply the standard retrospectively. We are evaluating the disclosure impact of ASU 2023-09 and its impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires companies to disclose additional information about specific expense categories in the notes to the financial statements. ASU 2024-03 will be effective for annual periods beginning January 1, 2026 and will be applied either prospectively to financial statements issued for reporting periods after the effective date of this update or retrospectively to any or all prior periods presented in the financial statements. Early adoption is permitted. We are evaluating the disclosure impact of ASU 2024-03 and its impact on the Company’s consolidated financial statements.

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Note 3. Revenue

The Company generates revenues primarily by providing accommodations to its guests. Direct revenue is generated from stays booked through Sonder.com, the Sonder app, or directly through the Company’s sales personnel. Indirect revenue is generated from stays booked through third party online travel agencies (“OTAs”).

The following table sets forth the Company’s total revenues disaggregated between direct and indirect (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	Three months ended March 31,
	2024		2023		2024		2023
	2025		2024
Direct revenue	$	7741,~~189~~507	$	7358,~~569~~254	$	~~213,337~~	$	~~209,503~~
Indirect revenue	8477,~~925~~349		8775,~~327~~225		~~246,857~~		~~228,299~~
Total revenue	$	~~162~~118,~~114~~856	$	~~160~~133,~~896~~479	$	~~460,194~~	$	~~437,802~~

No individual guest represented over 10% of revenues for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024.

Three OTAs represented approximately 28%, 19%, and 15% of revenues for the three months ended March 31, 2025. Three OTAs represented approximately 25%, 17%, and 1311% of revenues for the three months ended ~~September~~March 3031, 2024.

~~Three~~No OTAs represented ~~approximately~~over 2410%, ~~14%, and 12%~~ of ~~revenues for~~ the ~~three~~gross ~~months~~accounts ~~ended~~receivable ~~September~~balance ~~30,~~at ~~2023. Three OTAs represented approximately 22%~~March 31, ~~17%,~~2025 and ~~11% of revenues for the nine months ended September 30~~December 31, 2024. ~~Three OTAs represented approximately 22%, 14%, and 12% of revenues for the nine months ended September 30, 2023.~~

No OTAs represented over 10% of the gross accounts receivable balance at September 30, 2024, and one OTA represented approximately 17% of the gross accounts receivable balance as of December 31, 2023.

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Note 4. Balance Sheet Details

Other current assets

Other current assets consists of the following (in thousands):

	September 30, 2024				December 31, 2023
			March 31, 2025				December 31, 2024
Non-income-related tax assets	$	14,555			$	10,030
Non-income tax assets			7,785				8,150
Deposits due from landlords	~~805~~		841		~~844~~		539
Other current assets	~~167~~		1,159		~~471~~		1,044
Total other current assets	$	~~15,527~~	$	9,785	$	~~11,345~~	$	9,733

Other non-current assets

Other non-current assets consists of the following (in thousands):

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
Long-term deposits due from landlords	$	1214,~~065~~337	$	12,~~667~~813
Deferred tax assets	14,~~703~~247		14,~~738~~171
Debt issuance costs on undrawn credit facilities	~~363~~194		~~518~~259
Other non-current assets	~~305~~364		~~227~~301
Total non-current assets	$	14,436	$	15,150
Total other non-current assets	$	19,142	$	17,544

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Accrued liabilities

Accrued liabilities consists of the following (in thousands):

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
Accrued legal expenses	$	1623,~~660~~617	$	1518,~~219~~540
Accrued compensation	32,~~660~~893		41,~~395~~703
Accrued direct costs(1)	31,~~591~~590		3,~~754~~454
Deferred FF&E allowances	2,039		2,459
Accrued other liabilities	6,363		8,924
Accrued other liabilities	13,147		12,672
Total accrued liabilities	$	34,463	$	32,621
Total accrued liabilities	$	39,097	$	38,499

(1) Direct costs include utilities, maintenance, insurance, cleaning, and other expenses related to the Company’s properties.

Other non-current liabilities

Other non-current liabilities consists of the following (in thousands):

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
Forward contract liability	$	125,173	$	—
Marriott key money liability	$	7,250	$	7,344
Preferred stock participation right	1,303		—
Other	820		769
Other	113		127
Total other non-current liabilities	$	8,070	$	8,113
Total other current liabilities	$	126,589	$	127

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Note 5. Fair Value Measurement and Financial Instruments

Fair Value Hierarchy

Accounting standards require the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices in active markets. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets and liabilities.

Level 2: Quoted prices for similar assets and liabilities in active markets. These are typically quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs are observable in active markets.

Level 3: Unobservable inputs in which there is little or no market data that are significant to the fair value of the assets or liabilities.

A financial instrument’s classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Forward Contract Liability

As part of the Securities Purchase Agreements, as described further in Note 7, Redeemable Preferred Stock, the transaction included a Liability-classified forward contract for commitments of investors to purchase, and commitments of the Company to sell, additional Series A Convertible Preferred Stock. This commitment ended upon the issuance of the Second Tranche of Series A Preferred Stock in November 2024, as discussed in Note 15, Subsequent Events. The Company recognized a change in fair value of the forward contract of $86.6 million as the remeasurement reflecting fluctuations in the underlying variables and assumptions from inception on August 13, 2024 through the quarter ended on September 30, 2024.

Preferred Stock Participation Right

As part of the August 2024 Securities Purchase Agreements, as described further in Note 7, Redeemable Preferred Stock, the Company recognized a liability for ~~this~~the preferred stock participation right of $1.3 million within other current liabilities in the condensed consolidated balance sheets as of ~~September 30~~March 31, ~~2024~~2025. The ~~Company recognized a~~ change in fair value of the participation right ofrecognized ~~$12 thousand as the remeasurement reflecting fluctuations in the underlying variables and assumptions~~ from inception on August 13, 2024 through the quarter ended on ~~September~~March 3031, ~~2024~~2025 was not significant.

SPAC Warrants

As part of ~~GMII~~Gores Metropoulos II, Inc.’s (“GMII”) initial public offering, GMII issued 9,000,000 public warrants (the “Public Warrants”) and 5,500,000 private placement warrants (the “Private Placement Warrants”), of which, every 20 warrants are exercisable for one share of common stock at a price of $230.00 per share (collectively, the “SPAC Warrants”).

Management has determined that the SPAC Warrants issued in GMII’s initial public offering, which remained outstanding at the consummation of the Business Combination and became exercisable for shares of the Company’s common stock, are subject to accounting treatment as a liability. At the consummation of the Business Combination and at September 30, 2024, the Company used the Public Warrants stock price to value the Public Warrants. 14

At consummation of the Business Combination, the Company used a Monte Carlo simulation methodology to value the Private Placement Warrants using Level 3 inputs, as the Company did not have observable inputs for the valuation. At December 31, 2022, the Company used the Black-Scholes option-pricing model to estimate the fair value of the Private Placement Warrants using Level 3 inputs. During the three months ended March 31, 2022, the Private Placement Warrants were transferred by the original holders and, in accordance with the contractual terms of the Private Placement Warrants, became Public Warrants upon transfer. As such, at September 30, 2024, the Company used the Public Warrants stock price to value all SPAC Warrants.

At September 30, 2024, the SPAC Warrants were valued at $0.01 per warrant.

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Management has determined that the SPAC Warrants issued in GMII’s initial public offering, which remained outstanding at the consummation of the business combination of GMII with Sonder Operating Inc. f/k/a Sonder Holdings Inc. (the “Business Combination”) and became exercisable for shares of the Company’s common stock, are subject to accounting treatment as a liability. At the consummation of the Business Combination and at March 31, 2025, the Company used the Public Warrants stock price to value the Public Warrants.

At March 31, 2025, the SPAC Warrants were valued at $0.01 per warrant.

Refer to Note 9, Warrants and Stockholders’ Deficit, for additional information about the SPAC Warrants.

Earn Out Liability

In addition to the consideration paid at the consummation of the Business Combination, certain investors may receive their pro rata share of up to an aggregate of 725,000 additional shares of the Company’s common stock as consideration upon the common stock achieving certain benchmark share prices (the “Earn Out”), as set forth in the ~~Merger~~merger ~~Agreement~~agreement (the “~~Earn~~Merger ~~Out~~Agreement”). Management has determined that the Earn Out is subject to accounting treatment as a liability (the “Earn Out Liability”).

At ~~September~~March 3031, ~~2024,~~2025 ~~the~~and ~~Company~~December ~~used~~31, a2024, ~~Monte Carlo simulation methodology to value~~ the Earn Out ~~using~~Liability Level 3 inputs. The key assumptions used in the Monte Carlo simulation are related to expected share-price volatility of 82.5%, expected term of 2.79 years, risk-free interest rate of 3.6%, and dividend yield of 0%. The expected volatility at September 30, 2024 was ~~derived~~not ~~from the volatility of comparable public companies~~significant.

Delayed Draw Warrants

The fair value of the Delayed Draw Warrants (as defined in Note 6, Debt) was estimated by separating the Delayed Draw Notes (as defined in Note 6, Debt) into the debt and warrants components and assigning a fair value to each component. The value assigned to the debt component was the estimated fair value as of the issuance date of similar debt without the warrants. The value assigned to the Delayed Draw Warrants component was estimated using the Black-Scholes option-pricing model using Level 3 inputs and was considered to be non-recurring in nature, in accordance with ASC 820, Fair Value Measurement. The warrants component was recorded as a debt discount, which is amortized using the effective interest method over the period from the date of issuance through the maturity date. Upon consummation of the Business Combination, the fair value of the Delayed Draw Warrants was $5.6 million and was included in additional paid-in capital in the condensed consolidated balance ~~sheet~~sheets. ~~The~~As ~~Delayed~~described ~~Draw~~in ~~Warrants~~Note ~~were~~6, ~~canceled~~ Debt, in connection with the ~~issuance~~Third ofNotes ~~the~~Amendment ~~June~~to that certain Note and Warrant Purchase Agreement, dated as of December 10, ~~2024~~2021 ~~Third~~(the ~~Notes~~“2021 ~~Amendment~~Purchase asAgreement”), ~~described~~the inpurchasers to the Note 6Purchasers Agreement (the “NPA Purchasers”) received New Delayed Draw Warrants and the previously issued Delayed Draw Warrants to the NPA Purchasers were canceled. In August 2024, ~~Debt~~all New Delayed Draw Warrants were exercised for cash.

NPA Waiver Obligation and NPA Waiver Warrants

In connection with the NPA Waiver (as defined in Note 6, Debt), the Company promised to issue shares or to deliver cash to the NPA Purchasers (as defined in Note 6, Debt) (the “NPA Waiver Obligation”). The Company accounted for the NPA Waiver Obligation as a liability classified instrument. Upon issuing the NPA Waiver Obligation, the fair value was $1.3 million.

Following approval of the Share Increase Proposal (as defined in the NPA Waiver) at the Company’s annual meeting of stockholders held on December 23, 2024 (the “2024 Annual Meeting”), on December 30, 2024, the Company issued warrants to the NPA Purchasers to purchase an aggregate of 500,000 shares of the Company’s common stock, each with an exercise of $0.01 (the “NPA Waiver Warrants”). The NPA Waiver Obligation was marked to fair value of $1.6 million immediately prior to the settlement of the obligation. Upon settlement of the obligation, the NPA Waiver Obligation was recharacterized as NPA Waiver Warrants, which are accounted for as liabilities. As of the effective date of December 30, 2024, the NPA Waiver Warrants can be exercised with no restrictions. As such, at March 31, 2025 and December 31, 2024, the Company’s stock price was used to value all NPA Waiver Warrants. The change in fair value of the NPA Waiver Warrants as of the effective date of December 30, 2024 through the quarter ended on December 31, 2024 was not significant. The change in the fair value of the NPA Waiver Warrants for the quarter ended on March 31, 2025 was $0.6 million.

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Recurring Fair Value Measurements

At ~~September~~March 3031, ~~2024~~2025, the ~~Forward~~Preferred ~~Contract~~Stock ~~Liability~~Participation ~~and~~Right ~~the~~(as defined in Note 7, Redeemable Preferred Stock) ~~Participation~~and ~~Right~~NPA Waiver Warrants were included in other current liabilities in the condensed consolidated balance sheets. At ~~September~~March 3031, ~~2024~~2025, the Earn Out Liability and Public Warrants liability were included in other non-current liabilities in the ~~condensed~~ consolidated balance sheets. The following table presents fair value information for liabilities measured at fair value on a recurring basis as of ~~September~~March 3031, ~~2024~~2025 (in thousands):

	Level 1		Level 3		Total
Forward Contract Liability(1)	$	—	$	125,173	$	125,173
Preferred Stock Participation Rights	$	—	$	1,313	$	1,313
Preferred Stock Participation Right(2)	—		1,303		1,303
NPA Waiver Warrants	995		—		995
Earn Out Liability	—		4015		4015
Public Warrants	~~297~~203		—		~~297~~203
Total liabilities measured at fair value	$	~~297~~1,198	$	~~126~~1,~~516~~328	$	~~126~~2,~~813~~526

~~(1)~~ At ~~inception~~December 31, on2024, ~~August~~the Preferred Stock Participation Right and NPA Waiver Warrants were included in other current liabilities in the condensed consolidated balance sheets. At December 1331, 2024, the Earn Out Liability and Public Warrants liability were included in other non-current liabilities in the condensed consolidated balance sheets. The following table presents fair value ofinformation ~~the~~for ~~Forward~~liabilities ~~Contract~~measured ~~Liability~~at ~~was~~fair ~~$38.6~~value ~~million.~~on a recurring basis as of December 31, 2024 (in thousands):

(2) At inception, on August 13, 2024, the fair value of the Preferred Stock Participation Right was $1.3 million.


	Level 1		Level 3		Total
Preferred Stock Participation Rights(1)	$	—	$	1,284	$	1,284
NPA Waiver Warrants(2)	1,585		—		1,585
Earn Out Liability	—		15		15
Public Warrants	203		—		203
Total liabilities measured at fair value	$	1,788	$	1,299	$	3,087

(1) At ~~December~~inception, on August 3113, ~~2023~~2024, the ~~Earn Out Liability and Public Warrants liability were included in other non-current liabilities in the condensed consolidated balance sheets. The following table presents~~ fair value ~~information~~of ~~for~~the ~~liabilities~~Preferred ~~measured~~Stock atParticipation ~~fair~~Right ~~value~~was on$1.3 ~~a recurring basis as of December 31, 2023 (in thousands):~~million.

	Level 1		Level 3		Total
Earn Out Liability	$	—	$	45	$	45
Public Warrants	290		—		290
Total liabilities measured at fair value	$	290	$	45	$	335

(2) At inception, on December 30, 2024 when the NPA Waiver Obligation was recharacterized as NPA Waiver Warrants, the fair value of the NPA Waiver Warrants were $1.6 million.

The following table represents changes in Level 3 liabilities measured at fair value on a recurring basis for the three months ended March 31, 2025 (in thousands):


	Level 3
Beginning balance, at January 1, 2025	$	1,299
Change in fair value of Preferred Stock Participation Right	29
Ending balance, at March 31, 2025	$	1,328

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The following table ~~represents~~presents changes in Level 3 liabilities measured at fair value on a recurring basis for the ~~nine~~year ~~months~~ ended ~~September~~December 3031, 2024 (in thousands):

	Level 3
Beginning balance, at January 1, 2024	$	45
Transfers in to Level 3	39,894
Issuance of Forward Contract Liability	53,690
Change in fair value of Forward Contract Liability	86,570
Issuance of Preferred Stock Participation Right	1,291
Change in fair value of Preferred Stock Participation Right	12
Issuance of NPA Waiver Obligation	1,343
Change in fair value of Earn Out Liability	(5)
Change in fair value of Forward Contract Liability	28,652
Ending balance, at September 30, 2024	$	126,516
Change in fair value of Earn Out Liability	(30)
Change in fair value of Preferred Stock Participation Right	(7)
Change in fair value of NPA Waiver Obligation	237
Settlement of Forward Contract Liability	(82,342)
Settlement of NPA Waiver Obligation	(1,580)
Ending balance, at December 31, 2024	$	1,299

~~The~~There ~~following~~were ~~table~~no ~~presents~~transfers ~~changes~~of infinancial ~~Level~~instruments 3between ~~liabilities~~valuation ~~measured~~levels atduring ~~fair~~the ~~value~~three onmonths aended ~~recurring~~March 31, ~~basis~~2025 ~~for~~and the year ended December 31, ~~2023 (in thousands):~~2024.

	Level 3
Beginning balance, at January 1, 2023	$	2,417
Change in fair value of Earn Out Liability	(2,372)
Ending balance, at December 31, 2023	$	45

Management estimates that the fair values of its cash equivalents, restricted cash, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued liabilities, sales tax payable, deferred revenue and other current liabilities, approximates their carrying values due to the relatively short maturity of the instruments. The carrying value of the Company’s long-term debt approximates its fair value because it bears interest at a market rate and all other terms are also reflective of current market terms.

~~There~~These ~~were~~assumptions noare ~~transfers~~inherently ofsubjective ~~financial~~and ~~instruments~~involve ~~between~~significant ~~valuation~~management ~~levels~~judgment. ~~during~~Any ~~the~~change ~~nine~~in ~~months~~fair ~~ended~~value ~~September 30~~is recognized as a component of other income, ~~2024~~net, ~~and~~on the ~~year~~condensed ~~ended~~consolidated ~~December 31,~~statements ~~2023~~of operations and comprehensive loss.

Management estimates that the fair values of its cash equivalents, restricted cash, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued liabilities, sales tax payable, deferred revenue, and other current liabilities, approximates their carrying values due to the relatively short maturity of the instruments. The carrying value of the Company’s long-term debt approximates its fair value because it bears interest at a market rate and all other terms are also reflective of current market terms.

These assumptions are inherently subjective and involve significant management judgment. Any change in fair value is recognized as a component of non-operating (income) expense, net, on the condensed consolidated statements of operations and comprehensive income (loss).

Note 6. Debt

~~Delayed~~Note ~~Draw Notes~~ Purchase ~~Agreement~~Agreements

On December 10, 2021, the Company entered into ~~a note and warrant purchase agreement (~~the ~~“Delayed~~2021 ~~Draw Notes~~ Purchase Agreement”) with ~~certain~~NPA ~~private placement investors (the “~~Purchasers”) for the sale of delayed draw notes in an aggregate of $165.0 million (the “Delayed Draw Notes”) to be available to the Company following the consummation of the Business Combination. The ~~Delayed~~2021 ~~Draw Notes~~ Purchase Agreement also provided for the issuance of warrants to purchase an aggregate of 123,750 shares of the Company’s common stock, with an exercise price of $250~~.00~~ per share (the “Delayed Draw Warrants”).

InOn ~~November~~June ~~2023~~10, 2024, the ~~Delayed~~Company ~~Draw~~entered ~~Note~~into a waiver and amendment to the 2021 Purchase Agreement ~~was~~(the ~~amended~~“Third Notes Amendment”) to provide for (i) ~~extend~~a ~~the~~permanent ~~ability~~waiver toof ~~pay~~certain ~~interest~~non-compliance inrelating ~~kind~~to onfinancial reporting, (ii) the ~~Delayed~~limited ~~Draw~~forbearance ~~Notes~~of ~~through~~certain ~~July 19~~rights and remedies available under the transaction documents, ~~2024~~(iii) the amendment of certain financial covenants, and (iiiv) ~~provide~~additional ~~for~~commitments with an aggregate principal amount of $10.0 million. In addition, the ~~repayment~~NPA byPurchasers also received detachable warrants (the “New Delayed Draw Warrants”) to purchase an aggregate of 475,264 shares of the Company’s common stock, each with an exercise price of $~~30.~~0.01 ~~million~~per ofshare and an expiration date five years after the ~~outstanding~~issuance ~~principal~~date, ~~amount~~and the previously issued Delayed Draw Warrants to the NPA Purchasers were canceled. The NPA Purchasers were also provided with customary registration rights for shares issuable upon exercise of the New Delayed Draw ~~Notes~~Warrants. Subsequently on June 10, ~~plus~~2024, athe ~~prepayment~~Company ~~premium~~issued the $10.0 million of ~~approximately~~Delayed $4Draw Notes, together with the New Delayed Draw Warrants.3 ~~million~~In August 2024, ~~and~~all ~~(iii)~~New ~~add~~Delayed aDraw ~~minimum~~Warrants ~~liquidity~~were ~~covenant~~exercised for cash. The Company used the proceeds from this issuance of Delayed Draw Notes and athe ~~minimum~~exercise ~~FCF~~of ~~covenant~~the New Delayed Draw Warrants for general corporate purposes.

On July 12, 2024, the Company entered into an amendment to the 2021 Purchase Agreement to provide for additional commitments with an aggregate principal amount of up to $6.0 million issuable at the Company’s election. Subsequently on July 12, 2024, the Company issued the $6.0 million of Delayed Draw Notes. The Company used the proceeds from this issuance for general corporate purposes.

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On ~~June~~August 1013, 2024, the ~~Delayed~~Company ~~Draw~~entered ~~Notes~~into ~~Purchase~~an ~~Agreement~~amendment ~~was further amended~~ to ~~provide for (i) a permanent waiver of any non-compliance resulting from~~ the ~~NPA~~2021 ~~Waived~~Purchase ~~Matters~~Agreement ~~(as~~to, ~~defined~~among ~~below)~~other things, (iii) extend the ~~limited~~maturity ~~forbearance~~date of ~~certain~~all ~~rights~~outstanding ~~and~~Delayed ~~remedies~~Draw ~~available~~Notes ~~under~~to ~~the~~December ~~transaction documents~~10, ~~(iii) the amendment of certain financial covenants~~2027, ~~and~~ (ivii) ~~additional~~extend ~~commitments~~the ~~with~~Payment-in-Kind ~~an aggregate principal amount of $10.0 million. In addition, Purchasers also received detachable warrants~~ (~~the~~ “~~New Delayed Draw Warrants~~PIK”) tointerest ~~purchase~~payments anthrough ~~aggregate~~March ~~of 475~~31,~~264~~ ~~shares of the Company’s common stock~~2025, ~~each with an exercise price of $0.01 per share~~ and anat ~~expiration date five years after~~ the ~~issuance~~option ~~date,~~of ~~and~~ the ~~previously issued~~ Delayed Draw ~~Warrants~~Notes toobligors ~~the~~further ~~Purchasers~~extend ~~were~~the ~~canceled.~~PIK ~~The~~interest ~~Purchasers~~payments ~~were~~through ~~also~~December ~~provided~~31, ~~with~~2026, ~~customary~~and ~~registration~~(iii) ~~rights~~provide for ~~shares~~additional ~~issuable~~commitments ~~upon~~with ~~exercise~~an ofaggregate ~~the~~principal ~~New~~amount ~~Delayed~~of ~~Draw~~up ~~Warrants~~to $4.0 million. Subsequently on ~~June~~August 1013, 2024, the Company issued the $104.0 million of Delayed Draw Notes~~, together with the New Delayed Draw Warrants~~. ~~In August 2024, all New Delayed Draw Warrants were exercised for cash.~~ The Company used the proceeds from this issuance ~~of Delayed Draw Notes and the exercise of the New Delayed Draw Warrants~~ for general corporate purposes.

On ~~July~~October 1228, 2024, the ~~Delayed~~Company ~~Draw~~entered ~~Notes~~into a limited waiver and consent agreement (the “NPA Waiver”) to the 2021 Purchase Agreement ~~was~~to, ~~further~~among ~~amended~~other tothings, provide for ~~additional~~the ~~commitments~~Company’s ~~with~~commitment to, on the date that the Company files its Current Report on Form 8-K disclosing the voting results of the Company’s 2024 Annual Meeting, (1) if the Share Increase Proposal (as defined in the NPA Waiver) is approved at the 2024 Annual Meeting, issue warrants to the NPA Purchasers to purchase an aggregate ~~principal~~of ~~amount~~(A) 500,000 shares of upthe Company’s common stock, if the Company elects to issue warrants with an exercise price of $6.0 ~~million~~.01 ~~issuable~~or at(B) 625,000 shares of the Company’s ~~election.~~common ~~Subsequently~~stock, onif ~~July~~the 12Company elects to issue warrants with an exercise price of $1.00, or (2) if the Share Increase Proposal is not approved at the 2024 Annual Meeting, make a payment to the ~~Company~~NPA ~~issued~~Purchasers in the aggregate amount of $63.0 million. As a result of the NPA Waiver, the debt balances associated with the Delayed Draw Notes have been reclassified from current portion of long-term debt to long-term debt, net as of March 31, 2025 and December 31, 2024. ~~The~~Following ~~Company~~approval ~~used~~of the ~~proceeds~~Share ~~from~~Increase ~~this~~Proposal ~~issuance~~at ~~for~~the ~~general~~2024 ~~corporate~~Annual ~~purposes~~Meeting, the Company issued warrants to the NPA Purchasers.

OnAt ~~August~~both 13, 2024, the Delayed Draw Notes Purchase Agreement was further amended to, among other things, (i) extend the maturity date of all outstanding Delayed Draw Notes to December 10, 2027, (ii) extend the Payment-in-Kind (“PIK”) interest payments through March 31, 2025, and ~~at the option of the Purchasers, further extend the PIK interest payments through~~ December 31, ~~2026, and (iii) provide for additional commitments with an aggregate principal amount of up to $4.0 million. Subsequently on August 13,~~ 2024, the ~~Company~~effective ~~issued~~interest ~~the~~rate ~~$4.0 million~~ of the Delayed Draw Notes. ~~The~~was ~~Company used the proceeds from this issuance for general corporate purposes~~16.7%.

OnAs ~~October~~discussed 28in Note 15, ~~2024~~Subsequent Events, on August 5, 2025, the Company entered into a ~~limited~~Note ~~waiver~~ and ~~consent~~Warrant ~~agreement~~Purchase Agreement (the “~~NPA~~2025 ~~Waiver”) to the Delayed Draw Notes~~ Purchase Agreement ~~to provide for (i~~”), ~~a permanent waiver of any non-compliance resulting from (x) the Company entering into certain lease modification agreements to that certain Lease~~ with ~~respect to~~ certain ~~premises~~qualified ~~located~~institutional inbuyers ~~the~~or ~~building~~accredited ~~known~~investors as(each ~~and~~a ~~located~~“2025 atPurchaser” ~~23-20 Jackson Avenue~~and, ~~Long Island City~~collectively, ~~New~~the ~~York~~“2025 ~~11101~~Purchasers”), ascertain ~~amended,~~of ~~and~~whom ~~(y)~~are ~~the~~holders ~~Company’s~~of ~~failure~~shares ~~to deliver the audited financial statements for each~~ of the Company’s ~~fiscal~~Series ~~years~~A ~~ending~~Preferred ~~December 31~~Stock, ~~2023~~whereby ~~and~~the ~~December~~Company ~~31,~~issued ~~2024~~and ~~without~~sold a$24.540 million ~~“going~~of ~~concern”~~units ~~or like qualification~~ (the “~~NPA Waived Matters~~Units”), ~~and~~each ~~(ii)~~comprised ~~the Company’s commitment to, on the date that the Company files its Current Report on Form 8-K disclosing the voting results~~ of ~~the~~(i) ~~Company’s~~a ~~2024~~senior ~~annual~~secured ~~meeting~~promissory ofnote ~~stockholders~~ (the “~~2024~~Investor ~~Annual Meeting~~Notes”), ~~(1)~~and ~~if the Share Increase Proposal~~ (~~as defined in the NPA Waiver~~ii) isa ~~approved~~warrant ~~at the 2024 Annual Meeting, issue warrants~~ to ~~the Purchasers to~~ purchase ~~an aggregate of (A) 500,000~~ shares of the Company’s common stock, ifpar ~~the~~value ~~Company elects to issue warrants with an exercise price of~~ $0.010001 orper ~~(B)~~share ~~625,000 shares of~~ (the ~~Company’s~~“Common ~~common~~Stock”) ~~stock,~~at ~~if the Company elects to issue warrants with~~ an exercise price of $1.~~00,~~50 orper ~~(2)~~share if (the ~~Share Increase Proposal is not approved at the 2024 Annual Meeting~~“Warrants,” ~~make a payment to~~ the ~~Purchasers~~shares inunderlying the ~~aggregate amount of $3~~Warrants,~~000,000.~~ ~~As a result of~~ the ~~NPA~~“Warrant ~~Waiver~~Shares”, ~~the~~and ~~debt balances associated with~~ the ~~Delayed~~offering ~~Draw Notes have been reclassified from current portion~~ of ~~long-term~~the ~~debt to long-term debt~~Units, ~~net~~the ~~as of September 30, 2024~~“Financing”).

AtThe ~~September 30~~Investor Notes mature on July 4, ~~2024~~2026 and ~~December 31,~~accrue ~~2023,~~interest on the ~~effective~~unpaid ~~interest~~principal amount at a rate of ~~the~~15.0% ~~Delayed~~per ~~Draw~~annum, ~~Notes~~payable ~~was~~in 17kind quarterly in arrears.3% The Investor Notes are subject to mandatory redemption upon the occurrence of change of control events, certain asset sales and ~~17.4%~~excess cash flow amounts, ~~respectively~~subject to certain exceptions. The Company may use the proceeds of the Investor Notes for working capital and general corporate purposes.

~~Equipment~~Loan ~~Financing~~ Agreement

OnAs ~~July 25~~discussed in Note 15, ~~2023~~Subsequent Events, on August 5, 2025, the Company entered into a ~~master~~Loan ~~equipment~~Agreement ~~financing agreement~~ (the “~~EFA~~Loan Agreement”), ~~which~~with isMarriott ~~accounted~~International, ~~for~~Inc. (“MI”), as ~~debt~~administrative ~~under~~and ~~ASC~~collateral ~~470.~~agent Infor ~~accordance with~~ the ~~EFA~~lenders, ~~the~~providing ~~Company received approximately $3.0 million in exchange~~ for ~~conveying~~senior ansecured ~~interest~~notes ~~in certain furniture, fixtures, and equipment~~ (the “~~FF&E~~Lender Notes”). ~~The~~to ~~EFA~~evidence ~~contains~~the ~~customary~~replacement, ~~terms~~on ~~and~~a ~~events~~cashless ofbasis ~~default~~ and ~~provides~~ for 12a ~~quarterly~~period ~~payments~~of ~~with~~up anto ~~effective~~12 ~~interest~~months, ~~rate~~ of ~~approximately~~certain ~~12.8%~~fees ~~at both September 30, 2024~~ and ~~December 31,~~other ~~2023,~~amounts ~~which~~(the ~~includes~~“Roll-Up aPayments”) ~~balloon~~owed ~~payment~~to atMI ~~the~~by ~~end of~~ the ~~term.~~Company ~~The~~pursuant ~~EFA~~to ~~matures in July 2026. Upon maturity, all interest in~~ the ~~FF&E~~Third ~~will~~Amendment ~~revert~~described ~~back~~further ~~to the Company~~below.

The Lender Notes mature on July 4, 2026 and accrue interest on the unpaid principal amount at a per annum rate equal to the prime rate, plus 3.00%, payable in kind monthly in arrears. The Lender Notes are subject to mandatory prepayment upon the occurrence of change of control events, certain asset sales and excess cash flow amounts, subject to certain exceptions. The Lender Notes are guaranteed by the Company’s domestic subsidiaries and are secured by substantially all of the assets of the Company and its domestic subsidiaries on a pari passu basis and rank pari passu in right of payment to the Investor Notes. The Lender Notes and related liens will rank senior in right of payment and lien priority to the 2021 Notes (defined below). The Company may use the proceeds of the Lender Notes for paying the Roll-Up Payments and general corporate purposes.

The Loan Agreement includes customary events of default, including, among others, payment defaults, material breach of representations and warranties, breach of covenants, cross-default to other indebtedness, judgment defaults and bankruptcy and insolvency defaults, as well as an event of default if the Company fails to raise gross proceeds of at least $32.5 million from capital sources by November 15, 2025. The occurrence of an event of default could result in the acceleration of the Company’s obligations under the Lender Notes, an increase in the rate of interest and the lenders’ exercise of certain other rights and remedies provided for under the Loan Agreement, the other transaction documents and applicable law.

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On April 11, 2025, the Company received the remaining $7.5 million of Key Money under the Marriott Agreement, completing the $15.0 million investment.

Equipment Financing Agreement

On July 25, 2023, the Company entered into a master equipment financing agreement (the “EFA”), which is accounted for as debt under ASC 470. In accordance with the EFA, the Company received approximately $3.0 million in exchange for conveying an interest in certain furniture, fixtures, and equipment (the “FF&E”). The EFA contains customary terms and events of default and provides for 12 quarterly payments with an effective interest rate of approximately 12.8% at both March 31, 2025 and December 31, 2024, which includes a balloon payment at the end of the term. The EFA terminates in July 2026. Upon maturity, all interest in the FF&E will revert back to the Company.

Long term debt, net consisted of the following (in thousands):

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
Delayed Draw Notes Purchase Agreement, including capitalized PIK interest	$	~~222~~237,~~117~~977	$	~~180~~229,~~199~~996
EFA	1,~~750~~250		21,500
Less: debt discount related to Delayed Draw Warrants, net of amortization	(4,617)		(3,908)
Less: debt discount related to NPA Waiver Obligation, net of amortization	(1,158)		(1,272)
Less: unamortized deferred issuance costs	(8,399)		(8,581)
Less: debt discount related to Delayed Draw Warrants, net of amortization	(3,880)		(4,263)
Total debt, net	$	210,851	$	170,210
Less: unamortized deferred issuance costs	(7,028)		(7,725)
Less: current portion of long-term debt	(1,000)		(168,710)
Total debt, net	$	227,161	$	218,236
Total long-term debt, net	$	209,851	$	1,500
Less: current portion of long-term debt	(1,000)		(1,000)
Total long-term debt, net	$	226,161	$	217,236

At ~~September~~both March 3031, ~~2024~~2025 ~~the~~and ~~current portion of long-term debt consisted of $1.0 million in principal on the EFA. At~~ December 31, ~~2023~~2024, the current portion of long-term debt consisted of $~~167.7 million in principal on the Delayed Draw Notes Purchase Agreement and $~~1.0 million in principal on the EFA.

2022 Loan and Security Agreement

InOn December 10, 2022, the Company entered into a loan and security agreement with Silicon Valley Bank (“SVB”) (now, a division of First Citizens Bank & Trust Company) (the “2022 Loan and Security Agreement”) for a revolving line of credit in an aggregate principal balance of $60.0 million with a maturity date of December 21, 2025. The facility may be utilized for revolving loans or letter of credit issuances subject to the terms of the 2022 Loan and Security Agreement. As of ~~September~~March 3031, ~~2024~~2025, all letters of credit under this facility are fully cash collateralized, and as a result, the Company may not draw against the facility pursuant to the terms of the agreement. The 2022 Loan and Security Agreement includes: (i)(x) a letter of credit fee for each letter of credit equal to 1.5% per annum of the dollar equivalent of the face amount of each letter of credit issued and (y) a letter of credit fronting fee equal to 0.25% per annum of the dollar equivalent of the face amount of each letter of credit issued, and (ii) an unused revolving line fee equal to 0.25% per annum of the average unused portion of the revolving line of credit.

InOn April 28, 2023, the Company ~~further~~ amended the 2022 Loan and Security Agreement. ~~Among~~to, among other things, ~~the amendment~~ (i) ~~reduced~~reduce the required cash holdings account balances in the Company’s operating accounts, securities accounts, and depository accounts at or through SVB or its affiliates, (ii) ~~amended~~amend the minimum consolidated adjusted EBITDA financial covenant, and (iii) ~~provided~~provide additional flexibility to the Company under certain of the negative covenants in the ~~2022 Loan and Security Agreement~~agreement.

InOn November 6, 2023, the Company amended the 2022 Loan and Security Agreement ~~again.~~to ~~The amendment~~ (i) ~~removed~~remove the adjusted quick ratio financial covenant to which the Company was previously subject, (ii) ~~updated~~update certain financial reporting requirements, (iii) ~~reduced~~reduce the letter of credit sublimit from $60.0 million to $45.0 million, and (iv) ~~permitted~~permit a prepayment of the ~~Company’s~~Delayed ~~existing~~Draw ~~subordinated secured notes~~Notes.

On ~~September~~July 2612, 2024, the Company ~~entered~~amended ~~into a waiver agreement with SVB, pursuant to which SVB waived any Default or Event of Default (each as defined in~~ the 2022 Loan and Security Agreement) ~~related~~ to ~~covenant~~obtain ~~non-compliance~~(i) ~~resulting~~consent ~~from~~by ~~management’s~~SVB ~~conclusion~~to ~~that~~enter ~~there~~into isthe ~~substantial~~Fourth ~~doubt,~~Notes ~~which~~Amendment isand ~~not~~(ii) ~~alleviated,~~consent ~~about~~to the ~~Company’s~~incurrence ~~ability~~by tothe ~~continue~~Company asof aup ~~going~~to ~~concern~~$6.0 million ~~for at least one year from the date~~ of ~~issuance~~additional ofDelayed ~~these~~Draw ~~financial statements~~Notes.

On October 28, 2024, the Company entered into another waiver agreement with SVB, pursuant to which SVB waived any Default or Event of Default (i) related to covenant non-compliance resulting from management’s conclusion that there is substantial doubt, which is not alleviated, about the Company’s ability to continue as a going concern for at least one year from the date of issuance of these financial statements, (ii) as a result of Borrower entering into and performing its obligations under the Lease Modification Agreement, and (iii) as a result of the NPA Waived Matters.

At September 30, 2024, and as of the date the condensed consolidated financial statements were issued, the Company is in compliance with all financial covenants related to the 2022 Loan and Security Agreement, as amended. Additionally, at September 30, 2024, there were no revolving borrowings outstanding under the 2022 Loan and Security Agreement.

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~~Outstanding~~On ~~letters~~August ~~of credit at September 30~~13, 2024 ~~and December 31~~, ~~2023~~the ~~were~~Company ~~permitted~~amended ~~under~~ the 2022 Loan and Security Agreement ~~and~~to ~~totaled~~obtain consent by SVB to allow the Company to incur up to $474.5 0 million of additional Delayed Draw Notes and ~~$37.6~~to ~~million,~~enter ~~respectively~~into the August 2024 Securities Purchase Agreements.

At March 31, 2025, the Company was in compliance with all financial covenants related to the 2022 Loan and Security Agreement, as amended. Additionally, at March 31, 2025, there were no revolving borrowings outstanding under the 2022 Loan and Security Agreement. Outstanding letters of credit at March 31, 2025 and December 31, 2024 were permitted under the 2022 Loan and Security Agreement and totaled $40.6 million and $48.3 million, respectively.

As discussed in Note 15, Subsequent Events, on April 11, 2025, the Company entered into the SVB Amendment, by and among the Company, certain of its domestic subsidiaries party thereto, as co-borrowers (together with the Company, the “Borrowers”), and SVB, as lender, which amends the 2022 Loan and Security Agreement. Among other things, the SVB Amendment provides for (i) certain waivers in connection with the consummation of the transactions contemplated by the April 2025 Securities Purchase Agreements, (ii) the reduction of the revolving line of credit from $60.0 million to $35.0 million and the reduction of the letter of credit sublimit from $45.0 million to $35.0 million, and (iii) amendments to certain of the covenants under the 2022 Loan and Security Agreement. The Company terminated the 2022 Loan and Security Agreement on August 5, 2025.

Credit Facility

2020 Québec Credit Facility: In December 2020, a Canadian subsidiary of the Company entered into an agreement with Investissement Québec, a Quebecois public investment entity, that provides a loan facility of CAD $25.0 million and an additional loan, referred to as a conditional-refund financial contribution (“CRFC”), of CAD $5.0 million (the “2020 Québec Credit Facility”). The loan and the CRFC bear interest at a fixed rate of 6.0% per annum for a period of 10 years starting from the first date of the loan disbursement. At December 31, ~~2023~~2024, the Company was in compliance with all financial covenants related to the 2020 Québec Credit Facility, but had not yet met the drawdown requirements, and as such, there have been no borrowings against the 2020 Québec Credit Facility. On July 29, 2024, the Company received formal notification from Investissement Québec that, at the Company’s request, the 2020 Québec Credit Facility had been terminated. The Company was in compliance with all financial covenants related to the 2020 Québec Credit Facility during fiscal year 2024 until its termination on July 29, 2024.

Restricted Cash

During the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, the Company entered into multiple cash collateral agreements in connection with the issuance of letters of credit and corporate credit card programs. At ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, the Company had $4843.92 million and $4051.73 million, respectively, of cash collateral which is reported as restricted cash on the condensed consolidated balance sheets.

Note 7. Redeemable Preferred Stock

On August 13, 2024, the Company entered into Securities Purchase Agreements (the “Securities Purchase Agreements”) with certain qualified institutional buyers or accredited investors (collectively, the “Purchasers”) (the “Private Placement”) of an aggregate of 43.3 million newly issued shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), in exchange for cash consideration in an aggregate amount of approximately $43.3 million. The sale of the Series A Preferred Stock pursuant to the Securities Purchase Agreements took place in two tranches. The first tranche, comprised of approximately 14.7 million shares of preferred stock for an aggregate purchase price of approximately $14.7 million, closed on August 13, 2024. The second tranche, comprised of approximately 28.6 million shares of preferred stock in total for an aggregate purchase price of approximately $28.6 million, closed in multiple closings in November 2024, following the satisfaction of certain closing conditions set forth in the Securities Purchase Agreements, including the filing of the Annual Report and the Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2024 and June 30, 2024 (collectively, the “SEC Documents”). Following receipt of Stockholder Approval (as defined below), all 43.3 million shares of the Series A Preferred Stock are convertible into shares of common stock.

The Company recognized a loss on preferred stock issuance of $58.2 million and was recorded for the three and nine months ended September 30, 2024, attributable to the Securities Purchase Agreements. The Company identified the following two freestanding financial instruments issued in connection with the transaction, a) Mezzanine equity-classified Series A Convertible Preferred Stock and b) Liability-classified forward contract for commitments of investors to purchase, and commitments of the Company to sell, additional Series A Convertible Preferred Stock. As of the transaction inception, these instruments had an aggregate fair value of $72.9 million and the Company received $14.7 million from the first tranche closing, resulting in the $58.2 million loss on preferred stock issuance. No similar loss was recognized during the nine months ended September 30, 2023, as no issuance of this nature occurred.

As part of the Securities Purchase Agreements, the transaction included a Liability-classified forward contract for commitments of investors to purchase, and commitments of the Company to sell, additional Series A Convertible Preferred Stock. This commitment ended upon the issuance of the Second Tranche of Series A Preferred Stock in November 2024, as discussed in Note 15, Subsequent Events. The Company recognized a change in fair value of the forward contract of $86.6 million as the remeasurement reflecting fluctuations in the underlying variables and assumptions from inception on August 13, 2024 through the quarter ended on September 30, 2024. No similar change in fair value of forward contract was recognized during the nine months ended September 30, 2023, as no issuance of this nature occurred.

The Securities Purchase Agreements required the Company to hold a special meeting of stockholders within 30 calendar days of the filing of the SEC Documents for the purpose of obtaining stockholder approval of proposals to issue shares of common stock to the Purchasers in connection with the conversion of the Series A Preferred Stock into common stock that

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On August 13, 2024, the Company entered into the securities purchase agreements (the “August 2024 Securities Purchase Agreements”) with certain qualified institutional buyers or accredited investors of an aggregate of 43.3 million newly issued shares of Series A Preferred Stock, in exchange for cash consideration in an aggregate amount of approximately $43.3 million (the “August 2024 Preferred Financing”). The sale of the Series A Preferred Stock pursuant to the August 2024 Preferred Financing took place in two tranches. The first tranche, comprised of approximately 14.7 million shares of Series A Preferred Stock for an aggregate purchase price of approximately $14.7 million, closed on August 13, 2024. The second tranche, comprised of approximately 28.6 million shares of Series A Preferred Stock for an aggregate purchase price of approximately $28.6 million, closed on November 6, 2024, following the satisfaction of certain closing conditions set forth in the August 2024 Securities Purchase Agreements, including the filing of the Annual Report and the Company’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2024 and June 30, 2024 (collectively, the “SEC Documents”). The August 2024 Securities Purchase Agreements required the Company to hold a special meeting of stockholders within 30 calendar days of the filing of the SEC Documents for the purpose of obtaining stockholder approval of proposals to issue shares of common stock to the August 2024 Purchasers in connection with the conversion of the Series A Preferred Stock into common stock that would, absent such approval, violate Nasdaq Rules 5635(b), (c) and (d) (the “2024 Stockholder Approval”). The August 2024 Securities Purchase Agreements also require the Company to file a registration statement under the Securities Act within 30 calendar days of the filing of the Q2SEC ~~Form~~Documents ~~10-Q~~ with respect to the resale of shares of common stock receivable upon conversion of the Series A Preferred Stock. Following receipt of the 2024 Stockholder Approval, all 43.3 million shares of the Series A Preferred Stock are convertible into shares of common stock. At the Special Meeting of Stockholders held on September 30, 2024, the Company obtained the 2024 Stockholder Approval.

~~Francis~~The ~~Davidson,~~Company ~~the~~recognized ~~Company’s~~a ~~Chief~~loss ~~Executive~~on ~~Officer~~preferred ~~and~~stock ~~Chairman~~issuance of $83.8 million and was recorded for the year ended December 31, 2024, attributable to the August 2024 Securities Purchase Agreements. The Company’s ~~Board~~identified ofthe ~~Directors~~following (two freestanding financial instruments issued in connection with the ~~“Board”)~~transaction, (a) Mezzanine equity-classified Series A Preferred Stock and ~~Sanjay~~(b) ~~Banker~~Liability-classified forward contract for commitments of investors to purchase, aand ~~member~~commitments of the ~~Board~~Company to sell, ~~are~~additional ~~parties~~Series toA ~~Securities~~Preferred ~~Purchase~~Stock. ~~Agreements~~As of the transaction inception, ~~with~~these ~~commitments~~instruments had an aggregate fair value of ~~approximately~~$98.5 million and the Company received $114.7 million from the first tranche closing,~~500,000,~~ ~~and~~resulting in the $~~100~~83.8 million loss on preferred stock issuance. The loss on preferred stock issuance for the year ended December 31,~~000,~~ ~~respectively~~2024 consisted of $82.5 million related to the two freestanding financial instruments discussed above, inas well as $1.3 million associated with the ~~Private~~recognition ~~Placement~~of the preferred stock participation right (the “Preferred Stock Participation Right”), as discussed below.

~~The~~As ~~Securities~~part ~~Purchase~~of ~~Agreements grant~~ the ~~Purchasers~~August ~~the~~2024 ~~right~~Securities toPurchase ~~purchase~~Agreements, ~~up to 25% of any equity offering within~~ the ~~next~~transaction ~~five~~included ~~years (~~a ~~“Subsequent Financing”). The Purchasers are entitled to participate on a pro~~Liability-~~rata~~classified ~~basis~~forward ~~(determined~~contract byfor ~~their~~commitments ~~proportionate~~of ~~participation~~investors into ~~the Private Placement) at a~~ purchase, ~~price~~and ~~equal~~commitments ~~to 75%~~ of the ~~purchase~~Company ~~price~~to ofsell, ~~any~~additional ~~other~~Series ~~investor~~A inPreferred ~~such Subsequent Financing~~Stock. ~~The~~This ~~Company~~commitment ~~recognized~~ended aupon ~~liability~~the ~~for~~issuance ~~this~~of ~~preferred~~the ~~stock~~second ~~participation~~tranche ~~right~~ of ~~$1.3~~Series ~~million~~A ~~within~~Preferred ~~other~~Stock ~~current liabilities~~ in ~~the~~November ~~condensed consolidated balance sheets as of September 30,~~ 2024. The Company recognized a change in fair value of the ~~participation~~forward ~~right~~contract of $~~12 thousand~~28.7 million as the remeasurement reflecting fluctuations in the underlying variables and assumptions from inception on August 13, 2024 through the ~~quarter~~final ~~ended~~closing of the second tranche on ~~September 30~~November 6, 2024.

~~The~~Francis ~~Securities~~Davidson, ~~Purchase~~the ~~Agreements~~Company’s ~~contain~~former ~~other~~Chief ~~representations,~~Executive ~~warranties~~Officer and ~~covenants~~a former member of the Company’s Board of Directors (the “Board”), and Sanjay Banker, a member of the ~~Purchasers~~Board, are parties to the August 2024 Securities Purchase Agreements, with commitments of approximately $1.5 million, and $0.1 million, respectively, in the August 2024 Preferred Financing.

The August 2024 Securities Purchase Agreements grant the Purchasers the right to purchase up to 25% of any equity offering within the next five years (a “Subsequent Financing”). The Purchasers are entitled to participate on a pro-rata basis (determined by their proportionate participation in the Private Placement) at a purchase price equal to 75% of the purchase price of any other investor in such Subsequent Financing. The Company recognized a liability for this Preferred Stock Participation Right of $1.3 million within other current liabilities in the condensed consolidated balance sheets as of March 31, 2025. The change in fair value of the participation right recognized from inception on August 13, 2024 through December 31, 2024 and the change in change in fair value of the participation right recognized for the quarter ended on March 31, 2025 was not significant.

The August 2024 Securities Purchase Agreements contain other representations, warranties and covenants of the Company and the Purchasers.

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During the three months ended March 31, 2025, holders of a portion of the Series A Preferred Stock elected to convert their Series A Preferred Stock into common stock. The following table summarizes the activity of the outstanding Series A Preferred Stock as follows:


			Series A Preferred Stock
Balance, December 31, 2024			43,300,000
Shares converted to common stock			(667,000)
Balance, March 31, 2025			42,633,000

April 2025 Security Purchase Agreements

As discussed in Note 15, Subsequent Events, on April 11, 2025, the Company entered into the April 2025 Security Purchase Agreements with certain qualified institutional buyers or accredited investors.

Certificate of Designation; Other Terms of Preferred Stock

In connection with the ~~Private~~August ~~Placement~~2024 Preferred Financing, the Company filed the Certificate of Designation (the “Certificate of Designation”) creating the Series A Preferred Stock and establishing the rights, preferences and other terms of the Series A Preferred Stock. The Series A Preferred Stock ranks senior to the common stock with respect to the payment of dividends and distribution of assets upon liquidation, dissolution and winding up, and has a liquidation preference equal to the original issue price of $1.00 per share of Series A Preferred Stock, as adjusted for any stock dividends, splits, combinations and similar events on the Series A Preferred Stock.

Holders of the Series A Preferred Stock are entitled to receive, when, as and if declared by the Board, cumulative dividends in cash (subject to ~~certain~~ conditions that a cash payment (i) may not violate the Company’s debt agreements and (ii) may not be made without the prior written consent of holders of at least 70% of the outstanding Series A Preferred Stock) or, if not declared and paid in cash, receive an accrual of cumulative dividends as PIK on the liquidation preference, or at a rate of (a) fifteen percent (15.00%) from August 13, 2024 through August 13, 2025, (b) ten percent (10.00%) from August 14, 2025 through August 13, 2027, and (c) five percent (5.00%) from August 14, 2027 through August 13, 2028 on the sum of (i) the liquidation preference per share of Series A Preferred Stock and (ii) all accumulated and unpaid dividends (if any), payable quarterly, in arrears. Dividends accumulate on a daily basis from the most recent date as to which dividends have been paid, or, if no dividends have been paid, from the date of issuance of such shares of Series A Preferred Stock (whether or not (i) any of the Company’s agreements prohibit the current payment of dividends, (ii) there shall be earnings or funds of the Company legally available for the payment of such dividends, or (iii) the Company declares the payment of dividends), until the earlier of: (x) the date that the Company publicly reports that it has realized at least $87 .0 million of FCF (representing cash used in operating activities plus cash used in investing activities) over a twelve month period; or (y) August 13, 2028.

The Company paid-in-kind its dividend on the Series A Preferred Stock of $5.9 million for the three months ended March 31, 2025. PIK dividends are recognized using the fair value of the Series A Preferred Stock at the commitment date, which is the issuance date of each tranche for non-discretionary PIK dividends.

The Series A Preferred Stock has no stated maturity and will remain outstanding indefinitely unless converted into common stock. The Series A Preferred Stock will be convertible at the holders’ option into common stock at an initial conversion price of the lower of (i) $1.00 and (ii) a ten percent (10%) discount to the lowest daily VWAP of the common stock on the principal trading market therefor in the seven (7) trading days prior to the date of delivery of an Optional Conversion Notice (as defined in the Certificate of Designation); provided that the conversion price will not be less than $0.50, as adjusted for any stock dividends, splits, combinations or other similar events on the common stock or Series A Preferred Stock.

In the event of a Fundamental Change (as defined in the Certificate of Designation), any holder of Series A Preferred Stock may require the Company to redeem all or any portion of its Series A Preferred Stock at a price per share equal to the greater of (i) the liquidation preference, plus an amount equal to all accumulated and unpaid dividends on such shares (including dividends accrued and unpaid on previously unpaid dividends), or (ii) the amount that such holder would have received in the Fundamental Change on an as-converted basis.

21Following the Company obtaining the 2024 Stockholder Approval, holders of the Series A Preferred Stock are entitled to vote on an as-converted-to-common-stock basis as provided in the Certificate of Designation, are entitled to 0.7 vote for

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Following the Company obtaining the Stockholder Approval, holders of the Series A Preferred Stock are entitled to vote on an as-converted-to-common-stock basis as provided in the Certificate of Designation, are entitled to 0.7 vote for each share of Series A Preferred Stock they hold, and powers of the holders of the common stock, and are entitled to vote together with the common stock with respect to any question upon which holders of common stock have the right to vote. In addition, approval of holders of 70% of the shares of Series A Preferred Stock is required to among other things (i) alter or change the terms of the Series A Preferred Stock or of any other capital stock of the Company so as to affect adversely the Series A Preferred Stock, (ii) create, authorize the creation of, or issue any Senior Securities or Parity Securities (as such terms are defined in the Certificate of Designation) to the Series A Preferred Stock as to dividend, redemption or distribution of assets upon a Fundamental Change, (iii) increase or decrease the authorized number of shares of Series A Preferred Stock, (iv) ~~other than in connection with the Stockholder Approval, prior to July 1, 2025 increase the number of authorized shares of common stock, (v)~~ issue more than a number of shares of common stock set forth in the Certificate of Designation prior to July 1, 2025, or (viv) issue any Series A Preferred Stock except pursuant to the terms of the August 2024 Securities Purchase Agreements.

Note 8. Leases

The Company leases buildings or portions of buildings for guest usage and warehouses to store furniture under noncancellable operating lease agreements, which expire through ~~2049~~2045. The Company is required to pay property taxes, insurance, and maintenance costs for certain of these facilities.

The Company has lease agreements with lease and non-lease components and has elected to utilize the practical expedient to account for lease and non-lease components together in the condensed consolidated statements of operations and comprehensive ~~income (~~loss) for all classes of underlying assets.

Operating lease ROU assets are included within operating lease right-of-use assets in the condensed consolidated balance sheets. The corresponding operating lease liabilities are included within current operating lease liabilities and non-current operating lease liabilities in the condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Lease expense for fixed operating lease payments is recognized on a straight-line basis over the lease term. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option.

Components of lease expense are as follows (in thousands):

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

2024

2023

2024

2023

2025

2024

Operating lease cost

6975,~~410~~166

82,~~085~~114

~~223,790~~

~~230,701~~

Short-term lease cost

~~196~~542

~~343~~35

~~234~~

~~764~~

Variable lease cost

31,~~383~~512

~~2,019~~265

~~5,824~~

~~8,838~~

Total operating lease cost

7277,~~989~~220

8482,~~447~~414

~~229,848~~

~~240,303~~

Supplemental information related to operating leases is as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	Three months ended March 31,
	2024		2023		2024		2023
	2025		2024
Cash payments for operating leases	$	7072,~~709~~506	$	6881,~~343~~505	$	~~229,689~~	$	~~204,602~~
Operating ROU assets obtained in exchange for operating lease liabilities, net of adjustments(1)	$	29(60,~~228~~063)	$	87(81,~~045~~886)	$	~~(108,583)~~	$	~~199,808~~
Early lease terminations gains(1)	$	~~555~~11,138	$	~~139~~23,901	$	~~95,579~~	$	~~8,576~~

22At March 31, 2025 and December 31, 2024, the weighted-average remaining lease term was 6.7 years and 6.8 years, respectively, and the weighted-average discount rate used to determine the net present value of the lease liabilities was 9.50% and 9.40%, respectively.

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At ~~September~~March ~~30, 2024 and December~~ 31, ~~2023~~2025, ~~the weighted-average~~ remaining ~~lease~~maturities ~~term~~for ~~was~~operating ~~7.0 years and 7.4 years, respectively, and the weighted-average discount rate used to determine the net present value of the~~ lease liabilities ~~was~~are ~~9.4%~~as ~~and~~follows ~~9.5%,~~(in ~~respectively.~~thousands):

At September 30, 2024, remaining maturities for operating lease liabilities are as follows (in thousands):


	March 31, 2025
Remaining 2025	$	194,858
2026	252,684
2027	225,388
2028	198,696
2029	152,657
Thereafter	434,529
Gross lease payments	$	1,458,812
Less: imputed interest	(382,795)
Total operating lease liabilities, net	$	1,076,017

	September 30, 2024
Remaining 2024	$	65,526
2025	279,574
2026	271,148
2027	240,948
2028	211,054
Thereafter	635,764
Gross lease payments	$	1,704,014
Less: imputed interest	(463,044)
Total operating lease liabilities, net	$	1,240,970

Operating lease obligations primarily represent the initial contracted term for leases that have commenced as of March 31, 2025. In addition, as of March 31, 2025, we have entered into leases that have not yet commenced with future lease payments totaling $543.5 million, excluding purchase options, that are not yet recorded on the condensed consolidated balance sheets and are not reflected in the figure above. These leases will commence between 2025 and 2026 with non-cancelable lease terms of five to 20 years. Certain leases do not have a scheduled commencement date, as they are currently subject to renegotiation.

~~Operating~~As ~~lease~~of ~~obligations~~March 31, ~~primarily~~2025, ~~represent~~we ~~the~~determined ~~initial~~that ~~contracted~~four ~~term~~properties ~~for~~were ~~leases~~no ~~that~~longer ~~have~~being ~~commenced~~used asfor ofany ~~September 30,~~business ~~2024,~~purposes ~~not~~and ~~including~~applied ~~any~~abandonment ~~future~~accounting ~~optional~~pursuant ~~renewal~~to ~~periods.~~ASC In360, ~~addition~~Property, asPlant, ofand ~~September 30,~~Equipment. ~~2024,~~The weproperties ~~have~~were ~~entered~~returned ~~into~~to ~~leases~~the ~~that~~landlords, ~~have~~and ~~not~~we ~~yet~~fully ~~commenced~~amortized ~~with~~the ~~future~~respective ~~lease~~ROU ~~payments~~assets ~~totaling~~of $~~760~~10.0 4 million,. ~~excluding~~The ~~purchase~~respective ~~options,~~remaining ~~that~~lease ~~are~~liabilities, ~~not~~consist ~~yet~~of ~~recorded~~$4.6 onmillion ~~the~~in ~~condensed~~current ~~consolidated~~operating ~~balance~~lease ~~sheets~~liabilities and ~~are~~$12.6 ~~not~~million ~~reflected~~in non-current operating lease liabilities, remained in the ~~figure~~condensed ~~above~~consolidated balance sheets. ~~These~~No ~~leases~~termination ~~will~~agreements ~~commence~~have ~~between~~been ~~2024~~executed, ~~and~~as ~~2029~~we ~~with~~are ~~lease~~currently ~~terms~~involved ofin ~~three~~litigation towith 20the ~~years~~landlords.

Note 9. Warrants and Stockholders’ Deficit

Preferred Stock Warrants

Upon consummation of the Business Combination, (i) the Company’s then existing Series A and Series B preferred stock warrants were converted into 7,761 post-combination shares of the Company’s common stock for a value of $1.2 million, and (ii) the Company’s then existing Series C and Series D preferred stock warrants automatically converted into warrants to purchase shares of the Company’s common stock. ~~The Series C and Series D preferred stock warrants are accounted for as equity in accordance with ASC 815-40, Derivatives and Hedging – Contracts on an Entity’s Own Equity (“ASC 815-40”).~~

23The Series C and Series D preferred stock warrants are accounted for as equity in accordance with ASC 815-40, Derivatives and Hedging – Contracts on an Entity’s Own Equity (“ASC 815-40”).

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Common Stock Warrants

Former Series C and D Preferred Stock Warrants: In connection with the Business Combination, the Company had outstanding warrants to purchase 21,281 shares of common stock as of ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024.

Delayed Draw ~~Issuance~~Warrants: OnThe ~~June~~Delayed 10Draw Warrants which were outstanding as of December 31, ~~2024~~2023 were issued to the NPA Purchasers and were accounted for as equity-classified warrants in accordance with ASC 815-40. Upon consummation of the Business Combination, the value of the Delayed Draw Warrants was $5.6 million and was recorded within additional paid-in ~~connection~~capital in the consolidated balance sheets. The NPA Purchasers were also provided with customary registration rights for the ~~amendment~~shares toissuable upon exercise of the Delayed Draw Warrants. In connection with the Third Notes Amendment to the 2021 Purchase Agreement, the NPA Purchasers ~~also~~ received New Delayed Draw Warrants to purchase an aggregate of 475,264 shares of the Company’s common stock, each with an exercise price of $0.01 per share and an expiration date five years after the issuance date., ~~The~~and ~~Purchasers~~the ~~were~~previously ~~also~~issued ~~provided~~Delayed ~~with~~Draw ~~customary~~Warrants ~~registration~~to ~~rights~~the ~~for~~NPA ~~the~~Purchasers ~~shares~~were ~~issuable~~canceled. ~~upon~~In ~~exercise~~August of2024, ~~the~~all New Delayed Draw Warrants were exercised for cash.

~~Delayed~~SPAC ~~Draw~~ Warrants: The ~~Delayed~~Public ~~Draw~~ Warrants ~~which~~remained ~~were~~ outstanding asupon consummation of ~~December 31,~~the ~~2023~~Business ~~were~~Combination ~~issued~~and tobecame ~~the~~exercisable ~~initial~~for ~~Purchasers~~whole ~~and~~shares ~~were~~of ~~accounted~~common ~~for~~stock. asThe ~~equity-classified~~Public ~~warrants~~Warrants inwill ~~accordance~~expire ~~with~~on ~~ASC~~January ~~815-40~~18, 2027, or earlier upon redemption or liquidation. ~~Upon~~The ~~consummation~~Private Placement Warrants had terms and provisions that were identical to those of the ~~Business~~Public ~~Combination~~Warrants, ~~the~~except ~~value~~that of the ~~Delayed~~Private ~~Draw~~Placement Warrants ~~was~~could ~~$5.6~~be ~~million~~physical (cash) or net share (cashless) settled and ~~was~~were ~~recorded~~not ~~within~~redeemable, ~~additional~~so ~~paid-in~~long ~~capital~~as inthey were held by Gores Metropoulos Sponsor II, LLC (the ~~consolidated~~“Sponsor”) ~~balance~~or ~~sheets.~~its ~~The~~permitted ~~Purchasers~~transferees, ~~were~~and ~~also~~are ~~provided~~entitled ~~with~~to ~~customary~~certain registration rights. ~~for~~As discussed in Note 5, Fair Value Measurement and Financial Instruments, during the ~~shares~~three ~~issuable~~months ~~upon~~ended ~~exercise~~March of31, 2022, the ~~Delayed~~Private ~~Draw~~Placement Warrants. ~~Such~~were ~~warrants~~transferred ~~were~~by ~~canceled~~the warrant holders in ~~connection~~accordance with the ~~June~~terms ~~10,~~of ~~2024~~the ~~amendment~~Private toPlacement ~~the~~Warrant ~~Delayed~~agreement ~~Draw~~and ~~Notes~~became ~~Purchase~~Public ~~Agreement~~Warrants.

~~SPAC Warrants:~~ The SPAC Warrants are accounted for as liabilities, as there are certain terms and features of the warrants that do not qualify for equity classification in accordance with ASC 815-40. The fair value of the SPAC Warrants at ~~September~~both March 3031, ~~2024~~2025 and December 31, ~~2023~~2024 was a liability of $0.2 million ~~and $0.3 million~~, ~~respectively,~~ which ~~were~~was recorded in the other non-current liabilities in the condensed consolidated balance ~~sheet~~sheets. The change in fair value ~~of $0.1 million~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 iswas ~~reflected~~not ~~as non-operating income in the condensed consolidated statements of operations and comprehensive (loss) income~~significant.

At September 30, 2023, the fair value of the SPAC Warrants was $0.2 million and was recorded in other non-current liabilities in the condensed consolidated balance sheets. The change in fair value of $0.7 million for the nine months ended September 30, 2023 is reflected as non-operating income in the condensed consolidated statements of operations and comprehensive (loss) income.

Exchangeable Stock

Upon consummation of the Business Combination on January 18, 2022, each share of Sonder Canada Inc. (“Legacy Sonder Canada”) exchangeable common stock (“Legacy Sonder Canada Exchangeable Stock” and collectively, “Legacy Sonder Canada Exchangeable Shares”) was exchanged into a new series of the same class of virtually identical Legacy Sonder Canada Exchangeable Common Stock (“Post-Combination Exchangeable Common Stock” and collectively, “Post-Combination Exchangeable Shares”) exchangeable for the Company’s common stock. On that date, all the Legacy Sonder Canada Exchangeable Shares were automatically converted into 1,616,767 Post-Combination Exchangeable Shares for a value of $49.7 million.

The Company had the following authorized and outstanding Post-Combination Exchangeable Common Stock (in thousands, except per share amounts):

	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
Shares authorized	2,000,000		2,000,000
Shares issued and outstanding	~~551~~550,~~072~~959		~~712~~551,~~982~~072
Issuance price per share	$	30.80	$	30.80
Net carrying value	$	16,~~973~~970	$	2116,~~960~~973
Aggregate liquidation preference	$	16,~~973~~970	$	2116,~~960~~973

The net carrying value of the Post-Combination Exchangeable Shares is included in additional paid-in capital in the condensed consolidated balance sheets.

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Common and Preferred Stock

OnThe ~~September 20, 2023, the~~ Company’s ~~effected~~certificate ~~a 1-for-20 reverse stock split~~ of ~~the~~amendment ~~outstanding shares~~ of ~~the Company’s common stock (including special voting common stock) (the “Reverse Stock Split”). The Company’s~~ amended and restated certificate of incorporation ~~(the~~authorized ~~“Certificate~~shares of ~~Incorporation”)~~all ~~following~~classes ~~the~~of ~~Business~~capital ~~Combination~~stock ~~and~~were ~~the~~increased ~~Reverse~~to ~~Stock Split authorizes the issuance of 272~~409,~~000~~309,~~000~~144 shares, consisting of: (a) 22159,~~000~~309,~~000~~144 shares of general common stock, including: (i) 20157,~~000~~309,~~000~~144 shares of common stock, and (ii) 2,000,000 shares of ~~Special~~special ~~Voting~~voting ~~Common~~common ~~Stock~~stock, par value $0.001 per share, and (b) 250,000,000 shares of ~~preferred~~Preferred ~~stock~~Stock, par value $0.0001 per share.

The Company had reserved the following shares of common stock for future issuance:

	September 30, 2024	December 31, 2023
	March 31, 2025	December 31, 2024
Post-Combination Exchangeable Common Shares	~~551~~550,~~072~~959	~~712~~551,~~982~~072
Outstanding stock options	2,~~326~~199,~~849~~839	2,~~685~~129,~~922~~040
Outstanding restricted stock units (“RSUs”)	~~243~~2,~~370~~472,335	~~359~~236,~~175~~985
Outstanding market stock units (“MSUs”)	531,996	567,500
Outstanding performance stock units (“PSUs”)	4,163,851	—
Outstanding market stock units (“MSUs”)	531,996	531,996
Outstanding Public Warrants liability	724,997	724,997
Shares issuable pursuant to Earn Out Liability	725,000	725,000
Outstanding Delayed Draw Notes warrants liability	—	123,750
Outstanding former Series C and D preferred stock warrants liability	21,281	21,281
Shares available for grant under the Employee Stock Purchase Plan	463,930	~~353~~463,~~024~~930
Shares available for grant under the 2021 Equity Incentive Plan	12,~~548~~166,~~488~~767	~~569~~8,~~715~~092,529
Shares available for grant under the 2023 Inducement Equity Incentive Plan	~~166~~228,~~524~~864	~~141~~326,~~800~~677
Total common stock reserved for future issuance	714,~~303~~249,~~507~~819	613,~~985~~803,~~146~~507

Note 10. Equity Incentive Plans and Stock-Based Compensation

Stock-based Compensation Expense

Total stock-based compensation expense is as follows (in thousands):

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

2024

2023

2024

2023

2025

2024

Operations and support

~~295~~754

~~1,307~~858

~~1,924~~

~~6,282~~

General and administrative

1,~~090~~245

31,~~289~~845

~~3,640~~

~~14,572~~

Research and development

~~192~~233

~~475~~263

~~719~~

~~2,824~~

Sales and marketing

~~(147)~~43

~~119~~

~~304~~

Total stock-based compensation expense

12,~~614~~269

43,~~924~~009

~~6,402~~

~~23,982~~

Stock Options: The Company measures stock-based compensation expense for stock options at the grant date fair value of the award and recognizes the expense on a straight-line basis over the requisite service period, which is generally the vesting period. The fair value of stock options is estimated using the Black-Scholes option-pricing model. During the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024,~~2025 ~~the Company recorded stock-based compensation expense from stock options of approximately $0.5 million~~ and ~~$2.0 million, respectively. During the three and nine months ended September~~March 3031, ~~2023~~2024, the Company recorded stock-based compensation expense from stock options of approximately $20.85 million and $171.21 million, respectively.

The Company recognizes only the portion of the option award granted that is ultimately expected to vest as compensation expense and elects to recognize gross share-based compensation expense with actual forfeitures as they occur.

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Fair Value of Stock Options: The fair value of each stock option award is estimated using the Black-Scholes option-pricing model, which uses the fair value of the Company’s common stock and requires the input of the following subjective assumptions:

Expected term. The expected term for options granted to employees, officers, and directors is based on the historical pattern of option exercise behavior and the period of time they are expected to be outstanding.

Expected volatility. The expected volatility assumption is based on the ~~average~~historical volatility of ~~similar public entities within~~ the Company’s ~~peer~~common ~~group~~stock asover the ~~Company’s~~period ~~stock has not been publicly trading~~ for awhich ~~long~~data ~~enough~~was ~~period to rely on its own expected volatility~~available.

Expected Dividends. The dividend assumption is based on the Company’s historical experience. To date, Company has not paid any dividends on its common stock.

Risk-Free Interest Rate. The risk-free interest rate used in the valuation is the implied yield currently available on the United States Treasury zero-coupon issues, with a remaining term equal to the expected life term of the Company’s options.

The following table summarizes the key assumptions used to determine the fair value of the Company’s stock options granted to employees, non-employees, officers, and directors:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

2024*

2023

2024*

2023

2025

2024

Expected term (in years)

~~n/a~~5.04 - 8.44

6.1509 - 6.1622

~~n/a~~

~~6.15 - 6.22~~

Expected volatility

~~n/a~~51.5%

5150.24%

~~n/a~~

~~50.4% - 51.2%~~

Dividend yield

~~n/a~~—

—

~~n/a~~

—

Risk-free interest rate

~~n/a~~3.96% - 4.21%

43.3950% - 4.40%

~~n/a~~

~~3.50% - 4.40%~~

Weighted-average grant-date fair value per share

~~n/a~~$1.29

$41.0035 - $513.4169

~~n/a~~

~~$4.00 - $13.89~~

*n/a - The Company did not have any grant activity in the three and nine months ended September 30, 2024

Performance and Market-Based Equity Awards

The Company maintains certain performance and market-based equity awards. Refer to Note 11, Equity Incentive Plans and Stock-Based Compensation, of the Annual Report for details of the awards. From the awards, the Company recognized $0.21 million and $0.84 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024,~~2025 ~~respectively,~~ and ~~$0.5 million and $1.5 million for the three and nine months ended September 30~~March 31, ~~2023~~2024, respectively.

PSUs

The PSUs are subject to pre-determined performance metrics consisting of strategic and financial goals and related vesting criteria, as well as certain market conditions. The number of PSUs that will be eligible to vest is determined upon the Compensation Committee’s certification of achievement of the applicable metrics and criteria. For the three months ended March 31, 2025 and March 31, 2024, the Company recorded stock-based compensation expense from PSUs of approximately $0.4 million and zero, respectively.

RSUs

The fair value of the Company’s RSUs is expensed ratably over the vesting period. The Company’s RSUs generally vest over four years, with a cliff equal to one-fourth of the award after the first year, and then quarterly thereafter over the remaining service period. For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024,~~2025 ~~the Company recorded stock-based compensation expense from RSUs of approximately $0.9 million~~ and ~~$3.1 million, respectively. For the three and nine months ended September~~March 3031, ~~2023~~2024, the Company recorded stock-based compensation expense from RSUs of approximately $1.40 million and $41.73 million, respectively.

MSUs

In May 2022, the Company issued MSUs to certain key executives in accordance with the Company’s 2021 Management Equity Incentive Plan. One-sixth of the MSUs vest upon (including prior to but contingent on) the occurrence of each of six distinct triggering events, including if certain share price targets are met, within the five-year period ending July 17, 2027.

The Company determined the grant-date fair value of the MSUs using a Monte Carlo simulation. The Company recognizes stock-based compensation for the MSUs over the requisite service period, which is approximately four years, using the accelerated attribution method. During the three and nine months ended September 30, 2024, the Company did not grant any MSUs. During the three and nine months ended September 30, 2024, the Company recognized approximately $0.1

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~~million~~accelerated ~~and~~attribution $0method.5 ~~million~~During the three months ended March 31, ~~respectively~~2025, inthe ~~stock-based~~Company ~~compensation~~did ~~expense~~not ~~from~~grant any MSUs. ~~For~~During the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2025 and March 31, 2024, the Company recognized approximately $0.2 million and $0.62 million, respectively, in stock-based compensation expense from MSUs.

Note 11. Net ~~Income (~~Loss) per Common Share

Basic net ~~income (~~loss) per share is computed by dividing the net ~~income (~~loss) by the weighted-average number of shares of common stock outstanding during the period, less weighted-average shares subject to repurchase. The diluted net income (loss) per share is computed by giving effect to all potentially dilutive securities outstanding for the period. For periods in which the Company reports net losses, diluted net ~~income (~~loss) per share attributable to common stockholders is the same as basic net ~~income (~~loss) per share attributable to common stockholders, because potentially dilutive common shares are anti-dilutive.

The following tables set forth the computation of basic and diluted net ~~income (~~loss) per share (in thousands, except number of shares and per share information):

	Three months ended September 30,				Nine months ended September 30,
	Three months ended March 31,
	2024		2023		2024		2023
	2025		2024
Numerator:
Net loss	$	(~~179~~56,~~391~~495)	$	(5750,~~630~~487)	$	~~(197,131)~~	$	~~(183,679)~~
Less: Accretion to redeemable value of preferred stock	25,891		—		25,891		—
Add: Accretion to redeemable value of preferred stock	3,239		—
Net loss attributable to common stockholders	$	(205,282)	$	(57,630)	$	(223,022)	$	(183,679)
Add: Paid-in-kind dividend on preferred stock	(5,885)		—
Denominator:
Net loss attributable to common stockholders	$	(59,141)	$	(50,487)
Weighted average basic and diluted common shares outstanding	11,521,492		10,960,030		11,235,725		10,908,011
Denominator:
Net loss per common share:
Weighted average basic and diluted common shares outstanding	12,183,604		11,031,861
Basic and diluted	$	(17.82)	$	(5.26)	$	(19.85)	$	(16.84)
Net loss per common share:
Basic and diluted	$	(4.85)	$	(4.58)

The following potential common shares outstanding were excluded from the computation of diluted net loss per share because including them would have been anti-dilutive:

	September 30,
	Three months ended March 31,
	2024	2023
	2025	2024
Options to purchase common stock	2,326,849	2,611,093
Convertible preferred stock	42,633,000	—
Common stock subject to repurchase or forfeiture	75,134	76,157
Options to purchase common stock	2,199,839	2,555,676
Outstanding RSUs	243,370	580,999
Common stock subject to repurchase or forfeiture	74,942	75,645
Outstanding MSUs	531,996	377,825
Outstanding RSUs	2,472,335	567,500
Exchangeable shares	551,072	963,043
Outstanding PSUs	4,163,851	—
Total common stock equivalents	3,728,421	4,609,117
Outstanding MSUs	531,996	296,508
Exchangeable shares	550,959	712,982
Total common stock equivalents	52,626,922	4,208,311

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Note 12. Commitments and Contingencies

Operating leases

See Note 8, Leases, for commitments related to our operating leases.

Surety Bonds

A portion of the Company’s leases are supported by surety bonds provided by affiliates of certain insurance companies. At ~~September~~March 3031, ~~2024~~2025, the Company had commitments from six surety providers in the amount of $3938.23 million, of which $1614.6 million was outstanding. The availability, terms and conditions, and pricing of bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity, and the Company’s corporate credit rating.

Legal and Regulatory Matters

The Company has been and expects to continue to become involved in litigation or other legal proceedings from time to time, including the matters described below. ~~The~~Except ~~Company~~as ~~routinely~~described ~~reviews~~below, the ~~status~~Company ofis ~~each~~not ~~significant~~currently ~~matter~~a ~~and~~party ~~assesses~~to ~~its~~any ~~potential~~litigation ~~financial~~or ~~exposure.~~legal ~~Due~~proceedings tothat, in the ~~unpredictable~~opinion ~~nature~~of ~~and~~management, ~~inherent~~is ~~uncertainties~~likely ~~involved~~to have a material adverse effect on the Company’s business. Regardless of outcome, litigation and other legal proceedings can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, possible restrictions on the business as a result of settlement or adverse outcomes, and other factors.

The Company establishes an accrued liability for loss contingencies related to legal matters when a loss is both probable and reasonably estimable. These accruals represent management’s best estimate of probable losses. The Company recorded an estimated accrual of $1825.94 million and $1723.35 million in the condensed consolidated balance sheets as of ~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024, respectively. Management’s views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop. Until the final resolution of legal matters, there may be an exposure to losses in excess of the amounts accrued. With respect to outstanding legal matters and based on management’s current knowledge, we do not believe that the amount or range of reasonably possible losses will, either individually or in the aggregate, have a material adverse effect on the Company’s business, results of operations, financial condition, and cash flows.

New York City Litigation

In February 2020, the Company was informed about an investigation underway by the New York City Department of Health and Mental Hygiene relating to possible Legionella bacteria contamination in the water supply at the Company’s property located at 20 Broad Street, New York, NY (the “Broad Street Property”). Due to the failure of the owner of the Broad Street Property (the “Broad Street Landlord”) to address the Legionella bacteria contamination and the associated health risks posed to guests, the Company withheld payment of rent to the Broad Street Landlord on grounds of, among other reasons, constructive eviction. On July 30, 2020, the Broad Street Landlord sued Sonder USA Inc., Sonder Canada Inc., and Sonder Holdings Inc. (the “Sonder Parties”) for breach of the lease, seeking no less than $3.9 million in damages. The Sonder Parties filed counterclaims against the Broad Street Landlord and the property management company for breach of contract, seeking significant damages. The Broad Street Landlord filed a motion for summary judgment. The hearing and oral argument for the summary judgment motion occurred on December 21, 2021. On October 13, 2023, the court issued an order granting the summary judgment motion with respect to liability for the claim for breach of guaranty against Sonder Canada Inc., the claim for breach of contract against Sonder USA Inc., and reasonable attorney’s fees; dismissing the Sonder Parties’ counterclaims; and ordering a trial for the amount of damages. On November 13, 2023, the Sonder Parties filed a notice of appeal of the October 13, 2023 court order on liability. On May 9, 2024, the appellate court affirmed the trial court’s order as to liability, but directed the trial court to allow the Sonder Parties the right to conduct discovery concerning the amount of the Broad Street Landlord’s alleged damages. Discovery has commenced in the trial court regarding the Broad Street Landlord’s alleged damages. A trial date to determine damages has not yet been set. On June 12, 2024, the Sonder Parties filed a motion in the appellate court seeking leave to reargue aspects of the appellate court’s order, or alternatively, for leave to appeal the order. On September 26, 2024, the appellate court granted the Sonder Parties’ motion to reargue and issued an order reversing the portion of the trial court’s decision dismissing the Sonder Parties’ breach of contract claim related to the Broad Street Landlord’s failure to maintain the plumbing systems in good repair for the period prior to when the Sonder Parties began withholding payment of rent. On October 21, 2024, the Broad Street Landlord filed a motion seeking leave to amend its complaint in order to assert $37 .0 million in damages. Oral

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argument on that motion isoccurred ~~scheduled to occur~~ in the trial court on March 5, 2025, and discovery is stayed pending the court’s determination of the motion.

Sonder Stockholder Litigation

On April 11, 2024, a putative securities class action lawsuit titled Duffaydar v. Sonder Holdings Inc., et al., Case No. 24-cv-2952 was filed in the U.S. District Court for the Central District of California (the “Central District Court”) naming the Company and certain of its current and former officers and directors as defendants. A lead plaintiff and lead counsel were appointed, and an amended complaint was filed on December 23, 2024. The amended complaint purports to bring suit on behalf of stockholders who purchased or otherwise acquired the Company’s securities between March 16, 2023 and March 15, 2024, and alleges that the defendants made false and misleading statements about the Company’s financial results and condition, including the Company’s valuation of operating lease right of use assets, in violation of Sections 10(b) and 20(a) of the Exchange Act. The amended complaint seeks unspecified compensatory damages, fees and costs. The defendants filed a motion to dismiss on February 21, 2025 and the Central District Court took the defendant’s motion to dismiss under submission. The Company cannot reasonably estimate the amount of any possible financial loss that could result from this matter. The Company believes the plaintiffs’ allegations are without merit and intends to defend the action vigorously.

On January 28, 2025, a putative stockholder derivative lawsuit titled Versen v. Davidson, et al., Case No. 25-cv-761 was filed in the ~~U.S.~~Central District Court ~~for the Central District of California~~ naming certain of the Company’s current and former officers and directors as defendants and naming the Company as a nominal defendant. The derivative complaint is based on allegations similar to those in the Duffaydar class action and purports to assert claims against the individual defendants for making false and misleading statements about the Company’s financial results and condition in violation of Section 14(a) of the Exchange Act and for breach of their fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets and contribution under Sections 10(b) and 21D of the Exchange Act. The plaintiff seeks corporate reforms, unspecified damages and restitution, and fees and costs. On May 1, 2025, the Central District Court stayed this matter. The Company cannot reasonably estimate the amount of any possible financial loss that could result from this matter.

On March 7, 2025, a putative stockholder derivative lawsuit titled Akcayli v. Davidson, et al., Case No. 25-cv-2060 was filed in the Central District Court naming certain of the Company’s current and former officers and directors as defendants and naming the Company as a nominal defendant. The derivative complaint is based on allegations similar to those described in the Duffaydar class action and purports to assert similar claims against the same individual defendants as those in the Versen derivative action. The plaintiff seeks corporate reforms, unspecified damages and restitution, and fees and costs. On May 27, 2025, the Central District Court stayed this matter. The Company cannot reasonably estimate the amount of any possible financial loss that could result from this matter.

On March 17, 2025, a putative stockholder derivative lawsuit titled Hunter v. Aggarwal, et al., Case No. 25-cv-2352 was filed in the Central District Court naming certain of the Company’s current and former officers and directors as defendants and naming the Company as a nominal defendant. The derivative complaint is based on allegations similar to those described in the Duffaydar class action and purports to assert similar claims against the same individual defendants as the Versen derivative action. The plaintiff seeks corporate reforms, unspecified damages and restitution, and fees and costs. On June 27, 2025, the Central District Court entered an order continuing the defendants’ deadline to respond to the derivative complaint until after the Central District Court issues an order regarding the motion to dismiss in the Duffaydar class action. The Company cannot reasonably estimate the amount of any possible financial loss that could result from this matter.

GMII Litigation

On December 23, 2024, a putative stockholder of GMII filed a purported class action lawsuit titled Porter v. Metropoulos, et al., Case No. 2024-1336 in the Court of Chancery of the State of Delaware against Gores Metropoulos Sponsor II, the directors and officers of GMII, and two of the Company’s officers. The complaint purports to assert claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty and unjust enrichment in connection with the merger between GMII and Legacy Sonder and seeks unspecified damages and disgorgement. An amended complaint was filed on May 9, 2025, which dismissed one of the Company’s officers. The defendants filed a motion to dismiss on May 23, 2025. The Company cannot reasonably estimate the amount of any possible financial loss that could result from this matter.

Lawsuit Settlements

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On July 24, 2024, the Company favorably settled two lawsuits related to certain property leases for a total of $7.5 million payable in three tranches. The Company received the first tranche of $2.5 million in July 2024, the second tranche of $2.3 million in November 2024, and the third tranche of $2.7 million in January 2025. The Company recognized the settlement income when it was realized and earned accordingly in the periods of payment receipt.

Tax Contingencies

The Company is subject to audit or examination by various domestic and foreign tax authorities with regards to tax matters. Income tax examinations may lead to ordinary course adjustments or proposed adjustments to the Company’s taxes or net operating losses with respect to years under examination as well as subsequent periods. Indirect tax examinations may lead to ordinary course adjustments or proposed adjustments to transaction taxes which may increase operating expenses. The Company establishes an accrued liability for loss contingencies related to tax matters when a loss is both probable and reasonably estimable. These accruals represent management’s best estimate of probable losses.

In June 2019, His Majesty’s Revenue and Customs (“HMRC”) issued notices of determination and decisions that stated that, for the period October 2017 to April 2018, Sonder Europe Limited (“Sonder Europe”) incorrectly accounted for value added taxes (“VAT”) under the Tour Operators’ Margin Scheme (“TOMS”) for Sonder Europe’s leasing of residential apartments in the United Kingdom on long-term contracts and the subsequent short-term rental to travelers. In January 2023, Sonder Europe appealed to the First-Tier Tribunal Tax Chamber (the “FTT”) against HMRC’s notices. On July 5, 2023, the FTT delivered a ruling holding that supplies of accommodation made by Sonder Europe fell within the scope of the TOMS under the relevant VAT regulations. HMRC appealed the FTT’s ruling and on December 3, 2024, the appeal was heard in the Upper Tribunal. On January 14, 2025, the Upper Tribunal ruled that the FTT’s decision was wrong, and Sonder Europe was required to account for VAT on the full value of its supplies to travelers, rather than on the margin between the cost to Sonder Europe and the amount paid by travelers. The Company filed an appeal in March 2025.

29The Company recorded estimated accruals of $14.4 million and $15.3 million, respectively, in the taxes payable line item of the condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024, respectively, for such matters.

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was heard in the Upper Tribunal. On January 14, 2025, the Upper Tribunal ruled that the FTT’s decision was wrong, and Sonder Europe was required to account for VAT on the full value of its supplies to travelers, rather than on the margin between the cost to Sonder Europe and the amount paid by travelers. The Company intends to appeal this decision.

The Company recorded estimated accruals of $14.6 million and $6.8 million, respectively in the taxes payable line item of the condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively, for such matters.

Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact the Company’s tax contingencies. Due to various factors, including the inherent complexities and uncertainties of the judicial, administrative, and regulatory processes in certain jurisdictions, the timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next twelve months the Company will receive additional assessments by various tax authorities or possibly reach resolution of tax controversies in one or more jurisdictions. These assessments or settlements could result in changes to the Company’s contingencies related to positions on prior years’ tax filings. The actual amount of any change could vary significantly depending on the ultimate timing and nature of any settlements, and the range of possible outcomes is not currently estimable.

Indemnifications

The Company has entered into indemnification agreements with all of its directors and executive officers. The indemnification agreements and the Company’s Amended and Restated Bylaws (the “Bylaws”) require the Company to indemnify these individuals to the fullest extent not prohibited by Delaware law. Subject to certain limitations, the indemnification agreements and Bylaws also require the Company to advance expenses incurred. In addition, the Company entered into indemnification agreements with directors and officers of GMII in connection with the consummation of the Business Combination. These indemnification agreements provide these directors and officers with contractual rights to indemnification and advancement of certain expenses arising out of their service as directors and officers of GMII. The Company may be required to provide indemnification under the indemnification agreements or the Bylaws in relation to the legal proceedings described above in Note 12, Commitments and Contingencies. There are no claims that management is aware of that could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

In the ordinary course of business, the Company has included limited indemnification provisions under certain agreements with parties with whom it has commercial relations of varying scope and terms with respect to certain matters, including losses arising out of its breach of such agreements or out of intellectual property infringement claims made by third parties. It is not possible to determine the maximum potential loss under these indemnification provisions due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. To date, no ~~material costs have been incurred, either individually or collectively, in connection with the Company’s indemnification provisions.~~

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material costs have been incurred, either individually or collectively, in connection with the Company’s indemnification provisions.

Note 13. Income Taxes

The provision for income taxes for the three months ended ~~September~~March 3031, ~~2024~~2025 ~~was a benefit of $0.2 million~~ and ~~was $0.1 million for the three months ended September 30~~March 31, ~~2023. The provision for income taxes for the nine months ended September 30,~~ 2024 ~~and 2023~~ was $0.67 million and $0.12 million, respectively. The difference between the Company’s effective tax rate and the U.S. statutory rate of 21.0% for both periods was primarily due to a full valuation allowance related to the Company’s net deferred tax assets.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements.

Note 14. Restructuring Activities

On ~~March 1~~February 20, ~~2023~~2024, the Company announced a reduction in force plan affecting ~~approximately 14.0~~17% of the corporate workforce. AsThe ~~part~~Company ofsubstantially ~~this~~completed ~~restructuring,~~these efforts during the ~~Company~~first ~~incurred~~quarter of 2024. Total costs and cash expenditures were approximately $23.1 0 million in ~~one-time~~ restructuring costs, ~~for~~primarily ~~the~~related ~~year~~to ~~ended~~employee ~~December~~severance ~~31,~~and ~~2023~~benefits costs, ~~all~~and ofwere ~~which~~recognized ~~had~~and ~~been~~substantially paid ~~out~~in asthe offirst ~~December~~quarter ~~31,~~of ~~2023~~2024.

OnIn ~~February~~April 202025, ~~2024,~~ the Company ~~announced~~completed ana ~~additional~~ reduction in force ~~plan~~with ~~affecting~~approximately ~~17%~~$2.8 million ofin ~~the~~associated ~~corporate~~restructuring ~~workforce.~~costs, ~~The~~all ~~Company~~of ~~substantially~~which ~~completed~~are ~~these~~expected ~~efforts~~to ~~during~~be ~~the~~paid ~~first~~out ~~quarter~~in ofthe ~~2024.~~year ~~Total~~ended ~~costs~~December ~~and~~31, ~~cash~~ 2025.

30These restructuring costs are included in restructuring and other charges in the condensed consolidated statements of operations and comprehensive loss.

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expenditures were approximately $3 million in one-time restructuring costs, primarily related to employee severance and benefits costs, and were recognized and substantially paid in the first quarter of 2024.

These restructuring costs are included in restructuring and other charges in the condensed consolidated statements of operations and comprehensive income (loss).

Note 15. Subsequent Events

~~Amendments~~April to2025 ~~Articles of Incorporation~~Transactions

OnSecurities ~~October~~Purchase 1, 2024, following the approval of the stockholders at a special meeting of stockholders on September 30, 2024, the Company filed a certificate of amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect an increase in the number of authorized shares of common stock of the Company, par value $0.0001 per share, effective as of 4:01 p.m., Eastern Time, on October 1, 2024. As of the effective time, the Company’s total number of authorized shares of all classes of capital stock increased from 272,000,000 to 401,809,144. The number of authorized shares of common stock increased from 20,000,000 shares to 149,809,144 shares. The number of authorized shares of special voting common stock remained unchanged, with 2,000,000 shares authorized. The number of authorized shares of preferred stock remained unchanged with 250,000,000 shares authorized. On December 23, 2024, following the approval at the 2024 Annual Meeting, the Company filed a certificate of amendment to the Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect an increase in the number of authorized shares of capital stock of the Company, effective as of 4:01 p.m. Eastern Time on December 23, 2024. As of the effective time, the Company’s total number of authorized shares of all classes of capital stock increased from 401,809,144 to 409,309,144. The number of authorized shares of common stock increased from 149,809,144 shares to 157,309,144 shares. The number of authorized shares of special voting common stock remained unchanged, with 2,000,000 shares authorized. The number of authorized shares of preferred stock remained unchanged with 250,000,000 shares authorized.Agreements

~~Limited~~On ~~Waiver~~April 11, 2025, the Company entered into the April 2025 Securities Purchase Agreements, with certain qualified institutional buyers or accredited investors (each a “April 2025 Purchaser” and, ~~Consent~~collectively, ~~Agreement~~the to“April ~~Note~~2025 Purchasers”) whereby the Company issued and ~~Warrant~~sold ~~Purchase~~an ~~Agreement~~aggregate of 17.98 million shares (the “Preferred Shares”) of Series A Preferred Stock, at a purchase price of $1.00 per share, resulting in aggregate gross proceeds to the Company of $17.98 million (such offering, the “April 2025 Preferred Financing”). The terms of the Preferred Shares are identical to the outstanding shares of Series A Preferred Stock.

OnUnder ~~October~~the ~~28,~~April ~~2024~~2025 Securities Purchase Agreements, the ~~Company~~April ~~entered~~2025 ~~into~~Purchasers ~~the~~each ~~NPA~~agreed ~~Waiver~~that tothe ~~provide~~Preferred ~~for~~Shares ~~(a)~~collectively awill ~~permanent~~be ~~waiver~~immediately ofconvertible ~~any~~into ~~non-compliance~~up ~~resulting~~to ~~from~~19.99% of the ~~NPA~~outstanding ~~Waived~~shares ~~Matters~~of ~~and (b)~~ the Company’s ~~commitment~~common tostock, onpar ~~the~~value ~~date~~$0.0001 ~~that~~per ~~the~~share, ~~Company~~on ~~files~~April ~~its~~11, ~~Current~~2025. ~~Report~~The onApril ~~Form~~2025 ~~8-K~~Securities ~~disclosing~~Purchase Agreements require the ~~voting~~Company ~~results~~to ofhold ~~the~~a ~~2024~~special ~~Annual~~meeting ~~Meeting,~~of ~~(1)~~stockholders ifwithin ~~the~~30 ~~Share~~calendar ~~Increase~~days ~~Proposal~~after isthe ~~approved~~Company athas ~~the~~filed ~~2024~~this Annual ~~Meeting,~~Report ~~issue~~on ~~warrants~~Form to10-K for the ~~Purchasers~~purpose toof ~~purchase~~obtaining anstockholder ~~aggregate~~approval of ~~(A)~~a ~~500,000~~proposal ~~shares~~to approve the issuance of the ~~Company’s~~shares of common stock, ifissuable ~~the~~upon ~~Company~~conversion ~~elects~~of tothe ~~issue~~Preferred ~~warrants~~Shares ~~with~~in anaccordance ~~exercise~~with ~~price~~Rule 5635 of ~~$0.01~~Nasdaq orand, such proposal, the (B“First Nasdaq Proposal”) ~~625,000~~and ~~shares~~a ofproposal to increase the ~~Company’s~~number ~~common~~of ~~stock,~~authorized ifshares ~~the~~of ~~Company~~common ~~elects~~stock to ~~issue~~210,921,255 ~~warrants~~shares ~~with~~(the an“First ~~exercise~~Authorized ~~price~~Share ofProposal” ~~$1.00~~and, orsuch ~~(2)~~approvals iffor the ~~Share~~First ~~Increase~~Nasdaq Proposal isand ~~not~~the ~~approved~~First atAuthorized Share Proposal collectively, the ~~2024~~“2025 ~~Annual~~Stockholder ~~Meeting,~~Approval”). ~~make~~Following areceipt ~~payment~~of to2025 Stockholder Approval, the ~~Purchasers~~Preferred inShares ~~the~~are ~~aggregate~~fully ~~amount~~convertible into shares of ~~$3.0~~Common ~~million.~~Stock Onand ~~December~~will ~~31,~~vote ~~2024,~~on ~~the~~all ~~Company~~applicable ~~issued~~matters ~~warrants~~in toaccordance with the ~~Purchasers~~Certificate toof ~~purchase~~Designation. anThe ~~aggregate~~Company ofobtained ~~500,000~~the ~~shares~~2025 ofStockholder Approval at the ~~Company’s~~Special ~~common~~Meeting ~~stock,~~of ~~each~~Stockholders ~~with~~held anon ~~exercise~~June of6, $02025 (the “2025 Special Meeting”).~~01.~~

~~2022~~The ~~Loan~~April ~~and~~2025 ~~Security~~Securities ~~Agreement~~Purchase ~~Waiver~~Agreements also require the Company to file a registration statement under the Securities Act, within 30 calendar days of the filing this Annual Report on Form 10-K with respect to the resale of shares of common stock receivable upon conversion of the Preferred Shares.

SVB and its affiliates have engaged in, and may in the future engage in, banking and other commercial dealings in the ordinary course of business with Borrowers or their affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.

Series A Preferred Stock Issuance

In multiple closings in November 2024, we completed the issuance and sale of approximately 28.6 million shares (the “Second Tranche”) of Series A Preferred Stock for cash consideration of approximately $28.6 million, in a private placement pursuant to those certain securities purchase agreements with certain qualified institutional buyers or accredited investors that was previously announced. Including the Second Tranche, the Company has issued an aggregate of approximately 43.3 million shares of Series A Preferred Stock for aggregate cash consideration of approximately $43.3 million in the private placement.

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Notice of Delisting

On October 1, 2024, the Company received a letter (the “Staff Determination Letter”) from the Staff of the Listing Qualifications Department (“Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that it had filed the Annual Report with the SEC, but that the Company had not filed its Quarterly Report on Form 10-Q for the quarters ended June 30, 2024 (the “Q2 2024 Form 10-Q”) and March 31, 2024 (the “Q1 2024 Form 10-Q,” and collectively, the “Delinquent Filings”) by September 30, 2024, the deadline by which the Company was to file its Delinquent Filings in order to regain compliance with Nasdaq Listing Rule 5250(c)(1) (the “Rule”). The Staff Determination Letter stated that the Staff had determined that the Company’s common stock and warrants would be suspended from The Nasdaq Global Select Market at the opening of business on October 10, 2024, and a Form 25-NSE would be filed with the SEC, which would remove the Company’s securities from listing and registration on The Nasdaq Stock Market. The Staff Determination Letter further noted that the Company may appeal the Staff’s determination to a Hearings Panel (the “Hearings Panel”), pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 Series.

On October 2, 2024, the Company submitted an appeal to Nasdaq requesting a hearing before the Hearings Panel at which it intends to present its plan to regain and thereafter maintain compliance with all applicable listing requirements. The appeal automatically suspends any potential delisting through at least October 23, 2024, 15 calendar days from the date the request for hearing was due. In connection with its request for a hearing, however, the Company has also requested a stay of the suspension of trading and delisting of its common stock and warrants, pending the later hearing and decision of the Hearings Panel. The Company has been informed that hearings are typically scheduled to occur approximately 30-45 days after the date of the hearing request. Although the Company will use all reasonable efforts to regain compliance with the Rule, there can be no assurance that the Company will be able to regain compliance with that rule or will otherwise be in compliance with other Nasdaq listing criteria.

On October 23, 2024, the Company received a letter from the Staff notifying the Company that the Hearings Panel had granted the Company’s request to stay the suspension of trading and delisting pending a hearing on the merits scheduled to occur on November 14, 2024, and the subsequent decision of the Hearings Panel after the hearing.

On November 4, 2024, the Company filed the Delinquent Filings with the SEC. On November 6, 2024, the Company received a letter (the “Compliance Letter”) from the Staff notifying the Company that it was then in compliance with the Rule and that, as a result, the Hearings Panel had canceled the hearing. The Compliance Letter also stated that the Company would be subject to a Mandatory Panel Monitor for a period of one year from November 6, 2024.

On November 20, 2024, the Company received a notice (the “Notice”) from Nasdaq notifying the Company that, because the Company was delinquent in filing its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024 (the “Q3 Form 10-Q”), the Company no longer complied with the Rule, which requires companies with securities listed on Nasdaq to timely file all required periodic reports with the SEC. The Notice had no immediate effect on the listing or trading of the Company’s common stock or publicly traded warrants on the Nasdaq Global Select Market.

In accordance with Nasdaq’s listing rules, the Company had 60 calendar days after the Notice to submit a plan of compliance (the “Plan”) to Nasdaq demonstrating the Company’s ability to regain compliance with the Rule and sustain long-term compliance with Nasdaq’s listing rules, and Nasdaq has the discretion to grant the Company up to 180 calendar days from the due date of the Q3 Form 10-Q, or May 19, 2025, to regain compliance. The filing of this Q3 Form 10-Q cures the filing deficiency. The Company submitted a Plan to Nasdaq in January 2025.

Amendment to the Company’s 2021 Equity Incentive Plan

At the 2024 annual meeting of stockholders, the Company’s stockholders approved the first amendment to the Company’s 2021 Equity Incentive Plan, which increased the number of shares of common stock available for the issuance of awards under such plan to 9,957,029 shares of common stock, subject to automatic annual share increases as set forth in such plan.

Tax Matters

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~~the~~Francis ~~TOMS~~Davidson, ~~under~~ the ~~relevant VAT regulations. HMRC appealed the FTT~~Company’s ~~ruling~~former CEO and ona ~~December~~former 3,member ~~2024,~~on the ~~appeal~~Board, ~~was~~entered ~~heard~~into inan ~~the~~April ~~Upper~~2025 ~~Tribunal.~~Securities OnPurchase ~~January~~Agreement ~~14,~~with ~~2025,~~ the ~~Upper~~Company ~~Tribunal~~as ~~ruled~~part ~~that~~of the ~~FTT’s~~April ~~decision~~2025 ~~was~~Preferred ~~wrong~~Financing, ~~and~~pursuant ~~Sonder Europe was required~~ to ~~account~~which ~~for~~Mr. ~~VAT~~Davidson onpurchased ~~the full value of its supplies to travelers~~$595,000 ~~rather~~in ~~than on~~ the ~~margin~~April ~~between~~2025 ~~the~~Preferred ~~cost to Sonder Europe and the amount paid by travelers~~Financing. ~~The Company intends to appeal this decision.~~

To the extent the April 2025 Purchasers do not already have such right, the April 2025 Securities Purchase Agreements grant the April 2025 Purchasers the right to purchase up to 25% of any Subsequent Financing until August 13, 2029. The April 2025 Purchasers are entitled to participate on a pro-rata basis (determined by their proportionate ownership of the common stock assuming conversion of their shares of Series A Preferred Stock) at a purchase price equal to 75% of the purchase price of any other investor in such Subsequent Financing.

First Voting Support Agreement

In connection with the April 2025 Preferred Financing, on April 11, 2025, the Company entered into an agreement with stockholders representing approximately 58% of the Company’s outstanding voting power prior to the April 2025 Preferred Financing (the “First Voting Support Agreement”), pursuant to which the stockholder parties thereto agreed to, among other things, vote in favor of the First Nasdaq Proposal, and the First Authorized Share Proposal. The First Voting Support Agreement terminated in accordance with its terms following the completion of the 2025 Special Meeting.

Consent, Waiver and Sixth Amendment to Note and Warrant Purchase Agreement

On April 11, 2025, the Company entered the Sixth NPA Amendment, which modifies the 2021 Purchase Agreement, and the subordinated secured notes issued pursuant to the 2021 Purchase Agreement (the “Notes”).

Among other things, the Sixth NPA Amendment provides for (i) certain waivers in connection with the consummation of the transactions contemplated by the April 2025 Securities Purchase Agreements, (ii) the cancellation of an amount equal to 15% of the sum of the aggregate principal amount of the Notes and accrued but unpaid interest on the Notes as of the amendment date, (iii) a reduction in the interest rate applicable to the Notes, (iv) an extension of the option to pay interest in kind, and (v) amendments to certain covenants under the 2021 Purchase Agreement.

In connection with the Company’s entrance into the Sixth NPA Amendment, the Company issued warrants to the Investors to purchase an aggregate of up to 5 million shares of the Common Stock at $1.00 per share (collectively, the “NPA Warrants”). Each NPA Warrant became exercisable after the Company obtained the 2025 Stockholder Approval and will be exercisable until April 11, 2030. The exercise price of the NPA Warrants is subject to adjustment in the event of stock dividends, stock splits, stock combinations, reorganizations or similar events affecting the Common Stock. Subject to limited exceptions, a holder of the NPA Warrants will not have the right to exercise any portion of its NPA Warrant if the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares of Common Stock in excess of 4.99% of the shares of Common Stock then outstanding. At the holder’s option, upon notice to the Company, the holder may increase or decrease this beneficial ownership limitation not to exceed 9.99% of the shares of Common Stock then outstanding, with any such increase becoming effective upon 61 days’ prior notice to the Company.

Consent, Waiver and Sixth Amendment to 2022 Loan and Security Agreement

On April 11, 2025, the Company entered into the SVB Amendment.

Among other things, the SVB Amendment provides for (i) certain waivers in connection with the consummation of the transactions contemplated by the April 2025 Securities Purchase Agreements, (ii) the reduction of the revolving line of credit from $60.0 million to $35.0 million and the reduction of the letter of credit sublimit from $45.0 million to $35.0 million, and (iii) amendments to certain of the covenants under the 2022 Loan and Security Agreement.

Amendments to Articles of Incorporation or Bylaws

Prior to the consummation of the April 2025 Preferred Financing, on April 11, 2025, the holders of 70% of the shares of Series A Preferred Stock approved an amendment to the Certificate of Designation to increase the number of authorized shares of Series A Preferred Stock from 43.30 million to 61.28 million, consented to the transactions contemplated by the April 2025 Securities Purchase Agreements and approved matters related to the April 2025 Preferred Financing and the issuance of the New Delayed Draw Warrants that were subject to certain provisions in the Certificate of Designation. After

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obtaining such approval, the Company filed a Certificate of Amendment to the Certificate of Designation to increase the number of authorized shares of Series A Preferred Stock from 43.3 million to 61.28 million.

Marriott License Agreement

On April 11, 2025, the Company received the remaining $7.5 million of Key Money under the Marriott Agreement, completing the $15.0 million investment.

August 2025 Transactions

August 2025 Note and Warrant Purchase Agreement

On August 5, 2025, the Company entered into the 2025 Purchase Agreement whereby the Company issued and sold $24.54 million Units, each comprised of (i) the Investor Notes and (ii) the Warrants.

The Investor Notes mature on July 4, 2026 and accrue interest on the unpaid principal amount at a rate of 15.0% per annum, payable in kind quarterly in arrears. The Investor Notes are subject to mandatory redemption upon the occurrence of change of control events, certain asset sales and excess cash flow amounts, subject to certain exceptions. The Investor Notes are guaranteed by the Company’s domestic subsidiaries and are secured by substantially all of the assets of the Company and its domestic subsidiaries on a pari passu basis and rank pari passu in right of payment with the Lender Notes (defined below). The Investor Notes and related liens will rank senior in right of payment and lien priority to the 2021 Notes (defined below). The Company may use the proceeds of the Investor Notes for working capital and general corporate purposes.

The 2025 Purchase Agreement contains customary representations, warranties and affirmative and negative covenants of the Company and certain of its subsidiaries, including, among other restrictions and subject to certain exceptions, limitations on the ability of the Company and its subsidiaries to incur additional indebtedness, grant liens, dispose of assets, make certain restricted payments, enter into affiliate transactions, make capital expenditures, and make investments.

The Investor Notes also include customary events of default, including, among others, payment defaults, material breach of representations and warranties, breach of covenants, cross-default to other indebtedness, judgment defaults and bankruptcy and insolvency defaults, as well as an event of default if the Company fails to raise gross proceeds of at least $32.5 million from capital sources by November 15, 2025. The occurrence of an event of default could result in the acceleration of the Company’s obligations under the Investor Notes, an increase in the rate of interest and the 2025 Purchasers’ exercise of certain other rights and remedies provided for under the Investor Notes, the other transaction documents and applicable law.

The 2025 Purchase Agreement requires the Company to include proposals in a preliminary proxy statement on Schedule 14A filed no later than December 15, 2025, with a definitive proxy including such proposal distributed as soon as practicable, for the purpose of obtaining stockholder approval of (i) the issuance of the shares of Common Stock issuable upon exercise of the Warrants as required by Rule 5635 of Nasdaq (the “Second Nasdaq Proposal”) and (ii) an amendment to the Company’s certificate of incorporation to increase the number of authorized shares of Common Stock to allow for the issuance of the Warrant Shares (the “Second Authorized Share Proposal” and such approvals for the Second Nasdaq Proposal and the Second Authorized Share Proposal collectively, the “New Stockholder Approval”).

If the Company obtains the New Stockholder Approval, the Warrants will be exercisable for shares of Common Stock until August 5, 2029. Subject to certain exceptions, the exercise price of the Warrants is subject to adjustment in the event of stock dividends, stock splits, stock combinations, reorganizations or similar events affecting the Common Stock, or in the event the Company is deemed to have sold any Common Stock or securities of the Company that would entitle the holder thereof to acquire Common Stock for a consideration per share less than a price equal to the exercise price of the Warrants in effect immediately prior to such issuance. Subject to limited exceptions, a holder of the Warrants will not have the right to exercise any portion of its Warrant if the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares of Common Stock in excess of 4.99% of the shares of Common Stock then outstanding. At the holder’s option, upon notice to the Company, the holder may increase or decrease this beneficial ownership limitation not to exceed 19.99% of the shares of Common Stock then outstanding, with any such increase becoming effective upon 61 days’ prior notice to the Company. Under the Warrants, the Company is obligated to file a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), by no later than December 15, 2025 with respect to the resale of the Warrant Shares.

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The Warrants, which are collectively exercisable for an aggregate of 21,196,402 shares of Common Stock, provide that, in the case of certain fundamental transactions (including reclassification or reorganization of Common Stock, merger or consolidation of the Company or sale of all or substantially all assets in connection with which the Company is dissolved), the holder of the Warrant receives, subject to specified exceptions, the right to purchase and receive the securities or other property (including cash) receivable upon such event as if the holder of the Warrant had exercised such Warrant immediately prior to such event.

The 2025 Purchase Agreement also grants a certain Covered Investor (as defined in the 2025 Purchase Agreement), which is a 2025 Purchaser and a holder of the Company’s Series A Preferred Stock, the right to purchase up to 100% of any equity offering or certain debt financings until July 4, 2026.

Second Voting Support Agreement

In connection with the Financing, on August 5, 2025, the Company entered into an agreement with stockholders representing a majority of the Company’s outstanding voting power, pursuant to which the stockholder parties thereto agreed to, among other things, vote in favor of the Second Nasdaq Proposal and the Second Authorized Share Proposal (the “Second Voting Support Agreement”). Certain of the stockholders entering into the Second Voting Support Agreement also participated in the Financing.

Loan Agreement

On August 5, 2025, the Company entered into a Loan Agreement (the “Loan Agreement”) with Marriott International, Inc. (“MI”), as administrative and collateral agent for the lenders, providing for senior secured notes (the “Lender Notes”) to evidence the replacement, on a cashless basis and for a period of up to 12 months, of certain fees and other amounts (the “Roll-Up Payments”) owed to MI by the Company pursuant to the Third Amendment described further below.

The Loan Agreement contains customary representations, warranties and affirmative and negative covenants of the Company and certain of its subsidiaries, including, among other restrictions and subject to certain exceptions, limitations on the ability of the Company and its subsidiaries to incur additional indebtedness, grant liens, dispose of assets, make certain restricted payments, enter into affiliate transactions, make capital expenditures, and make investments.

The Loan Agreement also includes customary events of default, including, among others, payment defaults, material breach of representations and warranties, breach of covenants, cross-default to other indebtedness, judgment defaults and bankruptcy and insolvency defaults, as well as an event of default if the Company fails to raise gross proceeds of at least $32.5 million from capital sources by November 15, 2025. The occurrence of an event of default could result in the acceleration of the Company’s obligations under the Lender Notes, an increase in the rate of interest and the lenders’ exercise of certain other rights and remedies provided for under the Loan Agreement, the other transaction documents and applicable law.

Third Amendment to Marriott Agreement

On August 5, 2025, the Company entered into the Third Amendment to the Marriott Agreement, pursuant to which, among other things, the Roll-Up Payments owed to MI by the Company under the Marriott Agreement shall be replaced, on a cashless basis for a period of up to 12 months, in an amount evidenced under the Lender Notes.

Consent and Seventh Amendment to Note and Warrant Purchase Agreement

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On August 5, 2025, the Company entered into the Seventh Amendment to the 2021 Purchase Agreement (the “Seventh NPA Amendment”).

Among other things, the Seventh NPA Amendment provides for certain waivers in connection with the consummation of the transactions contemplated by the 2025 Purchase Agreement and the Loan Agreement and amendments to certain covenants under the 2021 Purchase Agreement.

2022 Loan and Security Agreement

On August 5, 2025, in connection with the Financing, the Company terminated the 2022 Loan and Security Agreement.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations of Sonder Holdings Inc. (“Sonder,” “Company,” “we,” “us” or “our”) should be read together with Sonder’s condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes thereto included in the Annual Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Sonder’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section entitled “Risk Factors” herein or in the Annual Report and our subsequent SEC filings. Sonder’s historical results are not necessarily indicative of the results that may be expected for any period in the future. Except as otherwise noted, all references to ~~2023~~2024 refer to the year ended December 31, ~~2023~~2024.

Overview

We are a leading global brand of premium, design-forward apartments and intimate boutique hotels serving the modern traveler. Launched in 2014, Sonder offers inspiring, thoughtfully designed accommodations and innovative, tech-enabled service combined into one seamless experience. Sonder properties are found in prime locations in ~~over~~ 40 ~~markets~~cities, spanning ~~ten~~nine 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, Sonder’s amenities and services ~~at Sonder~~ are just a tap away, making a world of better stays open to all. In ~~summer~~August 2024, ~~the~~we ~~company~~ announced a strategic licensing agreement with Marriott and completed the full integration with Marriott’s digital channels and platform in the second quarter of 2025. As of ~~September~~March 3031, ~~2024~~2025, we had approximately 109,~~100~~400 units available for guests to book at over ~~200~~180 properties ~~in 44 cities in 10 countries~~.

~~The Company~~Sonder’s Business Model

We work directly with real estate owners to lease properties that meet our standards and furnish and decorate ~~them~~the properties to provide a design-led, technology-enabled experience, and then make them available for guests to book ~~directly~~through direct channels (~~through~~i.e., the Sonder app, our website, or our sales personnel) or through indirect channels, (such as through Airbnb, ~~Expedia, and Booking~~Inc.~~com).~~ ~~Additionally~~(“Airbnb”), weExpedia ~~operate boutique hotels designated as Powered by Sonder properties~~Group, ~~each~~Inc. ~~with its own unique design elements and features~~(“Expedia”), ~~and~~Booking ~~which~~Holdings ~~are available for guests to book in the same manner as our other properties~~Inc. ~~We manage our properties using proprietary and third-party technologies and deliver services to guests via the Sonder app and 24/7 on-the-ground support~~(“Booking. ~~Incorporating technology into all aspects of the business~~com”), weand ~~offer~~other ~~consistent quality at a compelling value to our guests~~OTAs.

Our design-focused accommodations come in a variety of shapes and sizes to ~~suit~~accommodate our guests’ ~~needs~~ – from a multiple-bedroom apartment with a fully-equipped kitchen and private laundry facilities, to a hotel room or suite. Our ~~guests~~diverse ~~include~~product portfolio serves various traveler types, including leisure travelers, families, digital nomads, and business travelers. We manage our properties using proprietary and third-party technologies and deliver services to guests via the Sonder app and 24/7 on-the-ground support.

We currently lease all of our properties. In many of our leases, we have negotiated an upfront allowance paid by the real estate owner to help offset the capital invested to prepare and furnish a building and the individual units.

34In August 2024, we entered into the Marriott Agreement and integrated our properties with Marriott in the second quarter of 2025. As of June 2025, all Sonder properties are available for booking on Marriott’s digital channels, including Marriott.com and the Marriott Bonvoy® mobile app under the new “Sonder by Marriott Bonvoy” collection, and are expected to benefit from access to Marriott’s global sales organization and third-party agreements. Our properties also participate in the Marriott Bonvoy® travel platform, which began in October 2024 after the first phase of integration was complete.

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Recent Developments

~~Portfolio~~The ~~Optimization~~following -summary Inof ~~November 2023, we implemented a portfolio optimization program to mitigate losses related to~~ certain ~~underperforming~~events ~~properties~~ and todevelopments ~~assess~~subsequent ~~the Company’s portfolio of rents relative~~ to ~~current~~March ~~operations~~31, ~~and~~2025 ~~existing~~should ~~market~~be ~~rents.~~read ~~As described~~ in ~~the~~conjunction ~~Company’s Current Report on Form 8-K filed~~ with the ~~SEC~~additional oninformation ~~June~~contained ~~11,~~elsewhere ~~2024,~~in asthis ~~of June 10~~report, ~~2024,~~including ~~we had signed agreements to exit or reduce rent for approximately 105 buildings, or 4,300 units. Of~~ the ~~approximately~~information 80in ~~buildings,~~Note ~~or 3~~15,~~200~~ ~~units,~~Subsequent ~~with~~Events ~~finalized exit agreements, we had exited approximately 70 buildings, or 2,800 units, as of September 30, 2024. We expect~~ to ~~exit~~ the ~~remaining~~condensed ~~buildings~~consolidated ~~throughout~~financial ~~the~~statements ~~remainder~~included ~~of 2024 and 2025. As of September 30, 2024, we had approximately 10,100 Live Units and 1,100 Contracted Units, and we leased and operated properties~~ in 44this ~~cities and 10 countries~~report.

~~Notes~~Marriott ~~and~~License Warrants - On June 11, 2024 and July 15, 2024, we announced that we had issued $10.0 million and $6.0 million, respectively, of Delayed Draw Notes, and issued New Delayed Draw Warrants to purchase 475,264 shares of common stock to the Purchasers, pursuant to amendments to the Delayed Draw Note Purchase Agreement. The Delayed Draw Warrants to purchase 123,750 shares of our common stock that were originally issued to the Purchasers were canceled in connection with such amendments. In August 2024, all of the New Delayed Draw Warrants were exercised for cash.

~~Marriott~~As ~~License~~previously ~~Agreement~~disclosed, -on On August 13, 2024, wethe Company entered into the Marriott Agreement, whereby ~~our~~the Company’s portfolio of properties isjoined ~~expected to join~~ the Marriott system under a newly-created collection called “Sonder by Marriott Bonvoy.” Under the Marriott Agreement, ~~our~~the Company’s properties ~~will~~became ~~become~~ available for booking on Marriott’s digital platforms, including Marriott.com and the Marriott Bonvoy mobile app, and we will also gain access to Marriott’s global sales and marketing capabilities and distribution platform. Subject to us providing Marriott with reasonably satisfactory evidence that we have funded the Holistic Capital Solution and there being no monetary, bankruptcy related or exclusivity default by us under the Marriott Agreement, Marriott will provide us with $15 million of Key Money in two tranches by March 31, 2025. If the Marriott Agreement is terminated for any reason, we must reimburse Marriott, before the effective date of the termination, the Unamortized Key Money. We received the first tranche proceeds of $7.5 million on November 21, 2024.

Issuance of Series A Preferred Stock - On August 13, 2024, we entered into Securities Purchase Agreements (the “Securities Purchase Agreements”) with certain qualified institutional buyers or accredited investors (collectively, the “Purchasers”) (the “Private Placement”) of an aggregate of 43.3 million newly issued shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), in exchange for cash consideration in an aggregate amount of approximately $43.3 million. The sale of the Series A Preferred Stock pursuant to the Securities Purchase Agreements took place in two tranches. The first tranche, comprised of approximately 14.7 million shares of preferred stock for an aggregate purchase price of approximately $14.7 million, closed on August 13, 2024. The second and tranche, comprised of approximately 28.6 million shares of preferred stock in total for an aggregate purchase price of approximately $28.6 million, closed in multiple closings in November 2024. The Securities Purchase Agreements grant the Purchasers the right to purchase up to 25% of any equity offering within the next five years (a “Subsequent Financing”). The Purchasers are entitled to participate on a pro-rata basis (determined by their proportionate participation in the Private Placement) at a purchase price equal to 75% of the purchase price of any other investor in such Subsequent Financing. 37

Certificate of Amendment to the Certificate of Incorporation - On December 23, 2024, following the approval of the stockholders at our 2024 annual meeting of stockholders (the “Annual Meeting”), we filed a certificate of amendment to our Amended and Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect an increase in the number of authorized shares of capital stock of the Company, effective as of 4:01 p.m. Eastern Time on December 23, 2024. As of the effective time, our total number of authorized shares of all classes of capital stock was increased from 401,809,144 to 409,309,144, consisting of (a) (i) 157,309,144 shares of common stock, and (ii) 2,000,000 shares of special voting common stock, par value $0.0001 per share, and (b) 250,000,000 shares of preferred stock, par value $0.0001 per share.

NPA Waiver Warrants - On October 28, 2024, we entered into a limited waiver and consent agreement to that certain Delayed Draw Notes Purchase Agreement, dated December 10, 2021, as amended. Following the approval of the proposal to increase our authorized shares at the Annual Meeting, on December 31, 2024, we issued to the private placement investors of such Delayed Draw Notes Purchase Agreement warrants to purchase an aggregate of 500,000 shares of the Company’s common stock, each with an exercise price of $0.01 per share and an expiration date five years after the issuance date. The purchasers of such warrants were also provided with customary registration rights for the shares issuable upon exercise of such warrants.

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the second quarter of 2025, including Marriott.com and the Marriott Bonvoy mobile app, and the Company also gained access to Marriott’s global sales and marketing capabilities and distribution platform.

On April 11, 2025, the Company received the remaining $7.5 million, completing the $15.0 million investment under the Marriott Agreement (the “Key Money”).

On August 5, 2025, the Company amended the Marriott Agreement to, among other things, defer certain fees and other amounts owed to Marriott by the Company under the Marriott Agreement, for a period of up to 12 months.

April 2025 Transactions

Securities Purchase Agreements

As previously disclosed, on April 11, 2025, the Company entered into Securities Purchase Agreements (the “April 2025 Securities Purchase Agreements”) whereby the Company issued and sold an aggregate of 17.98 million shares (the “Preferred Shares”) of Preferred Stock, at a purchase price of $1.00 per share, resulting in aggregate gross proceeds to the Company of $17.98 million (the “April 2025 Preferred Financing”). The terms of the Preferred Shares are identical to the outstanding shares of Series A Preferred Stock.

Consent, Waiver and Sixth Amendment to Note and Warrant Purchase Agreement

As previously disclosed, on April 11, 2025, the Company entered into the Waiver, Consent and Sixth Amendment (the “Sixth NPA Amendment”), which modifies the 2021 Purchase Agreement. Among other things, the Sixth NPA Amendment provides for (a) certain waivers in connection with the consummation of the transactions contemplated by the April 2025 Securities Purchase Agreements, (b) the cancellation of an amount equal to 15% of the sum of the aggregate principal amount of the Notes (as defined in the 2021 Purchase Agreement) and accrued but unpaid interest on the Notes as of the amendment date, (c) a reduction in the interest rate applicable to the Notes, (d) an extension of the option to pay interest in kind and (e) amendments to certain covenants under the 2021 Purchase Agreement.

In connection with the Company’s entrance into the Sixth NPA Amendment, the Company issued warrants to the investors to purchase an aggregate of up to 5 million shares of common Stock at $1.00 per share (collectively, the “NPA Warrants”).

Consent, Waiver and Sixth Amendment to 2022 Loan and Security Agreement

As previously disclosed, on April 11, 2025, the Company entered into the Consent, Waiver and Sixth Amendment (the “SVB Amendment”), which modifies that certain Loan and Security Agreement, dated as of December 21, 2022 (the “2022 Loan and Security Agreement”). Among other things, the SVB Amendment provides for (a) certain waivers in connection with the consummation of the transactions contemplated by the April 2025 Securities Purchase Agreements, (b) the reduction of the revolving line of credit from $60.0 million to $35.0 million and the reduction of the letter of credit sublimit from $45.0 million to $35.0 million, and (c) amendments to certain of the covenants under the 2022 Loan and Security Agreement.

Waiver to 2022 Loan and Security Agreement

On June 27, 2025, the Company obtained a waiver to the 2022 Loan and Security Agreement from SVB that waived our noncompliance with certain financial reporting covenants.

Termination of the 2022 Loan and Security Agreement

On August 5, 2025, the Company terminated the 2022 Loan and Security Agreement.

August 2025 Transactions

Note and Warrant Purchase Agreement

As previously disclosed, on August 5, 2025, the Company entered into a Note and Warrant Purchase Agreement (the “2025 Purchase Agreement”), with certain qualified institutional buyers or accredited investors (each a “2025 Purchaser” and, collectively, the “2025 Purchasers”), certain of whom are holders of shares of the Company’s Series A Preferred Stock,

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whereby the Company issued and sold $24.54 million of units, each comprised of (i) a senior secured promissory note and (ii) warrant to purchase shares of the Company’s common stock, par value $0.0001 per share, at an exercise price of $1.50 per share.

Loan Agreement

As previously disclosed, on August 5, 2025, the Company entered into a Loan Agreement (the “Loan Agreement”) with Marriott International, Inc. (“MI”), as administrative and collateral agent for the lenders, providing for senior secured notes (the “Lender Notes”) to evidence the replacement, on a cashless basis and for a period of up to 12 months, of certain fees and other amounts (the “Roll-Up Payments”) owed to MI by the Company pursuant to the Third Amendment described further below.

Consent and Seventh Amendment to Note and Warrant Purchase Agreement

As previously disclosed, on August 5, 2025, the Company entered into the and Seventh Amendment (the “NPA Amendment”), by and among the Company, the subsidiary note obligors party thereto (together with the Company, the “Note Obligors”), the subsidiary guarantors party thereto, the investors party thereto and Alter Domus (US) LLC, as collateral agent, which modifies that certain Note and Warrant Purchase Agreement, dated as of December 10, 2021 by and among the Note Obligors, the guarantors party thereto from time to time, and the investors party thereto from time (as amended, amended and restated, supplemented, or otherwise modified from time to time, the “2021 Note Purchase Agreement”), and the subordinated secured notes issued pursuant to the 2021 Note Purchase Agreement (the “2021 Notes”).

Among other things, the NPA Amendment provides for certain waivers in connection with the consummation of the transactions contemplated by the Purchase Agreement and the Loan Agreement and amendments to certain covenants under the 2021 Note Purchase Agreement.

Lawsuit Settlements

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Management Discussion Regarding Opportunities, Challenges and Risks

Cash Flow Positive Plan

~~Our~~A primary focus is to put the business on a solid path to achieving sustainable positive Adjusted FCF as soon as possible (“Cash Flow Positive Plan”). Adjusted FCF is a non-GAAP measure, and the most directly comparable GAAP measure is cash used in operating activities, which was $(904.54) million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 compared to $(7240.53) million for the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024. We have continued to make progress toward this goal as our Adjusted FCF of $(636.9) million for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 was a $1821.97 million improvement compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024.

As part of our efforts to reach positive Adjusted FCF, we ~~have~~implemented ~~undertaken~~ a portfolio optimization program, ~~which involves discussions with landlords about renegotiating the terms of our leases at certain properties. This process has resulted and may result~~ in ~~contract~~November ~~modifications~~2023 ~~resulting in changes~~ to ~~rent~~mitigate ~~amounts,~~losses ~~lease~~related ~~durations, or other provisions of our lease agreements and has resulted and may result in the termination of certain leases leading~~ to ~~the transition of~~ certain underperforming properties ~~over time~~ and ~~the incurrence of certain expenses including but not limited~~ to ~~termination~~assess ~~fees~~our ~~and~~portfolio ~~impairment charges, which could be material. The goal~~ of ~~this~~rents ~~initiative~~relative is to ~~reduce~~current ~~those~~operations ~~properties’ impact on our profitability~~ and ~~cash~~existing ~~flow~~market ~~through mutually agreeable solutions~~rents. ~~The~~As ~~scope~~ of ~~the~~December ~~initiative~~31, ~~can be expected to change over time~~2024, ~~and~~ we ~~cannot~~had ~~predict~~signed ~~the~~agreements ~~number~~to exit or ~~product~~reduce ~~mix~~rent ofat ~~the~~approximately ~~units~~110 ~~that may be ultimately affected. Although we are optimistic about reaching mutually beneficial outcomes in many of these continuing discussions~~buildings, ~~the~~or ~~terms~~4,500 ~~scope~~units, ~~and~~as ~~timing~~part of ~~any additional changes to~~ our ~~lease~~portfolio ~~obligations,~~optimization asprogram. ~~well~~As asof ~~any~~June ~~other~~30, ~~effects~~2025, onall ~~our~~85 ~~landlord~~buildings, ~~relationships~~ or ~~reputation~~3,300 units with ~~future~~finalized ~~real~~exit ~~estate~~agreements ~~owners~~were ~~and guests who are affected by property transitions, are uncertain~~exited.

~~Our~~Additionally, ~~ability~~we toanticipate ~~reach~~that ~~our~~the ~~Adjusted~~Marriott ~~FCF~~Agreement ~~goal~~will isdeliver ~~subject~~significant torevenue ~~certain~~opportunities ~~risks,~~and ~~including~~operating ~~potential~~efficiencies ~~changes~~for inSonder. ~~travel~~Following ~~demand~~full ~~due~~integration towith ~~macroeconomic~~Marriott’s ~~factors~~extensive orglobal ~~other~~sales ~~developments~~and ~~affecting~~marketing ~~travel;~~capabilities, ~~inflation;~~as ~~uncertainties~~well ~~associated~~as with ~~the~~Marriott’s ~~timing~~loyalty platform and ~~scope~~distribution and booking channels, we expect these sources of new ~~property~~and ~~openings;~~improved ~~uncertainties~~demand ~~associated~~to ~~with~~drive ~~the~~substantial ~~portfolio~~uplift ~~optimization~~in ~~program~~RevPAR ~~described~~over ~~above;~~time. ~~our~~We ~~ability~~also expect to ~~achieve~~realize ~~our~~substantial ~~other~~customer ~~intended~~acquisition cost ~~reductions~~savings ~~and~~through ~~efficiencies;~~improved ~~and~~distribution ~~other~~channel ~~risks~~mix and ~~uncertainties~~preferred ~~described~~distribution ~~under~~channel ~~“Risk~~rates. ~~Factors”~~In April 2025, we announced that we are implementing cost reduction initiatives which, when complete, are expected to deliver approximately $50 million of annualized cost savings compared to the third quarter of 2024. The savings are anticipated to come from a combination of headcount reductions, software savings, and other efficiencies in conjunction with the ~~Annual~~Marriott ~~Report~~integration.

Our ability to reach our Adjusted FCF goal is subject to certain risks, including potential changes in travel demand due to macroeconomic factors or other developments affecting our industry, uncertainties associated with the timing and scope of new property openings, uncertainties associated with the portfolio optimization program described above, our ability to achieve other intended cost reductions and efficiencies, our strategic licensing agreement with Marriott, and the other risks and uncertainties described in the Annual Report, under Part I, Item 1A, “Risk Factors”.

Supply Growth

A key driver of our revenue growth is our ability to convert ~~units for which we have signed real estate contracts but are not yet available for guests to book (“~~Contracted Units”) into ~~units available for guest booking (“~~Live Units”) and, to a lesser extent, to continue signing properties with favorable terms. Certain signed leases have contingencies or conditions that we or the landlord must satisfy before we lease the units, and from time to time, we exclude some of these leases from our Contracted Units total based on our judgment about the likelihood that the contingencies or conditions will be satisfied.

As part of our Cash Flow Positive Plan, we slowed our planned pace of new unit signings to focus on growth primarily through the conversion of our Contracted Units into Live Units. ~~Our~~Additionally, ~~Live~~we ~~Units~~implemented ~~grew~~a byportfolio ~~the~~optimization ~~conversion~~program ofto ~~Contracted~~mitigate ~~Units~~losses ~~into~~related ~~Live~~to ~~Units.~~certain ~~However,~~underperforming ~~this~~properties ~~growth~~in ~~was~~November ~~offset~~2023, bywhich ~~the~~resulted ~~exit~~in ofexiting certain ~~units as part of the Company portfolio optimization program. As such, the~~ Live Units ~~decreased~~during ~~14.4%~~fiscal ~~from~~year ~~September 30, 2023 to September 30,~~ 2024 ~~to approximately 10,100 units~~. We ~~are~~have also ~~focused~~defaulted onor ~~targeting~~expect ~~high~~to ~~quality~~default ~~and~~on ~~100%~~certain ~~capital~~lease ~~light~~agreements ~~deals~~due ~~(as~~to ~~defined in~~ the ~~section entitled “Non~~non-~~GAAP~~payment ~~Financial~~of ~~Measures” below) for incremental unit signings~~rent. While we ~~continue~~intend to ~~sign~~cure ~~high~~any ~~quality,~~current ~~capital~~or ~~light~~future ~~units,~~defaults ~~development~~to ~~cost~~avoid ~~uncertainty~~loss ~~and~~of ~~augmented~~profitable ~~risk~~properties, ~~around~~material ~~financing~~monetary damages and ~~landlord~~future ~~sentiment~~litigation, ~~surrounding~~liquidity ~~our~~constraints ~~stock~~may ~~price~~prevent ~~performance~~us ~~began~~from todoing ~~slow the pace of signings starting in the second half of 2022~~so. ~~These~~During ~~challenges were more acute in~~ the ~~second,~~three ~~third,~~months ~~and~~ended ~~fourth quarters of 2023~~March 31, ~~resulting in fewer units signed in these periods than in prior quarters~~2025, ~~and~~Live ~~persisted~~Units indecreased ~~2024~~21.0% ~~Despite~~from ~~these challenges~~March 31, we2024 ~~continue~~ to ~~meaningfully~~approximately ~~scale~~9,400 ~~the business~~units, ~~primarily~~due ~~by continuing~~ to ~~convert~~the ~~our~~portfolio ~~Contracted~~optimization ~~Units into Live Units~~program.

36We are also focused on targeting 100% capital light deals for incremental unit signings. While we continue to sign capital light properties, development cost uncertainty and augmented risk around financing and landlord sentiment surrounding our stock price performance began to slow the pace of signings starting in the second half of 2022. These factors have been more acute since 2023, resulting in fewer units signed in these periods than in prior years.

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Ability to Attract and Retain Guests

Another key driver of our revenue growth is our ability to bring back repeat guests and to attract new guests through various channels. We source demand from a variety of channels, including directly, through Sonder.com, the Sonder app, or our sales personnel, and indirectly, through ~~online travel agencies (“~~OTAs”), such as Airbnb, Expedia, and Booking.com. While bookings made through OTAs incur channel transaction fees, they allow us to attract new guests who may not be familiar with the Sonder brand. In general, direct bookings are more advantageous to us as they do not incur channel transaction fees and also allow us to have a more direct relationship with our guests. Direct revenue as a percentage of total revenue ~~has~~was ~~fluctuated~~35% infor ~~recent years due to~~ the ~~COVID-19~~three ~~pandemic~~months ~~but~~ended ~~has~~March ~~stabilized~~31, ~~above~~2025 ~~40%~~and ~~(47.6~~44% for ~~the~~ three months ended ~~September~~March 3031, 2024). Additionally, we continue to focus on expanding our corporate sales business.

To a lesser extent, we also sourced demand from the Marriott Bonvoy® travel platform. During the period from October 2024 through the completion of the full Marriott integration, Marriott Bonvoy members have early access to earn and redeem Marriott Bonvoy points when booking directly on Sonder.com, and Sonder properties are featured on Marriott.com with links to Sonder.com for booking. Revenue earned through this method is captured in the direct total revenue reported above.

We completed the full Marriott integration in the second quarter of 2025. As of June 2025, all Sonder properties are available for booking on Marriott’s digital channels, including Marriott.com and the Marriott Bonvoy® mobile app under the new “Sonder by Marriott Bonvoy” collection. The Marriott Agreement provides us with access to Marriott’s global sales organization and third-party agreements. Our properties will also continue participating in the Marriott Bonvoy® travel platform.

Technology

We have invested, and will continue to invest, in resources in our technology architecture and infrastructure and in integrating our properties and systems into Marriott’s platform and systems pursuant to the Marriott Agreement. Technology is essential to our ~~user~~guest experience, as it leads guests through their entire Sonder stay, from booking through check-out. Technology also underpins our hospitality operations, ~~from~~including ~~underwriting~~demand ~~and supply growth~~generation, ~~to building openings, pricing and~~ revenue management, ~~demand generation, interior design, and~~ day-to-day operations, and more. By leveraging technology, our goal is to reduce operating costs and provide a better guest experience at a compelling value.

The full Marriott integration, which was completed in the second quarter of 2025, is expected to complement Sonder’s existing technology. We have invested, and will continue to invest, in our technology infrastructure and in integrating our properties and systems into Marriott's platform and systems.

Restructuring

In February 2024, we completed a reduction in force with approximately $3.0 million in associated restructuring costs, all of which were paid out in the year ended December 31, 2024.

In April 2025, we completed a reduction in force with approximately $2.8 million in associated restructuring costs, all of which are expected to be paid out in the year ended December 31, 2025.

Key Business Metrics

We track the following key business metrics to evaluate our performance, identify trends, formulate financial projections, and make strategic decisions. Accordingly, we believe these key business metrics provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team. These key business metrics may be different from similarly titled metrics presented by other companies.

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The following table provides the key metrics (rounded):

	Three months ended September 30,						Change					Nine months ended September 30,						Change
	Three months ended March 31,						Change
	2024			2023			No.			%		2024			2023			No.			%
	2025			2024			No.			%
Live Units (end of period)	109,~~100~~400			11,~~800~~900			(12,~~700~~500)			(1421.40)	%	~~10,100~~			~~11,800~~			~~(1,700)~~			~~(14.4)~~	%
Bookable Nights	~~922~~858,000			1,~~048~~081,000			(~~126~~223,000)			(1220.06)	%	~~3,014,000~~			~~2,903,000~~			~~111,000~~			~~3.8~~	%
Occupied Nights	~~783~~712,000			~~868~~821,000			(85109,000)			(913.83)	%	~~2,405,000~~			~~2,379,000~~			~~26,000~~			~~1.1~~	%
Total Portfolio(1)	1110,~~200~~050			1715,~~100~~300			(5,~~900~~250)			(34.53)	%	~~11,200~~			~~17,100~~			~~(5,900)~~			~~(34.5)~~	%
RevPAR	$	~~176~~139		$	~~154~~123		$	2216		1413.30	%	$	~~153~~		$	~~151~~		$	2		~~1.3~~	%
ADR	$	~~207~~167		$	~~185~~163		$	224		112.95	%	$	~~191~~		$	~~184~~		$	7		~~3.8~~	%
Occupancy rate	8483.90		%	8275.89		%	27.1		%	29.54	%	~~79.8~~		%	~~81.9~~		%	~~(2.1)~~		%	~~(2.6)~~	%

(1) Total Portfolio consists of Live Units and Contracted Units at the end of the period noted.

Live Units

Live Units generate Bookable Nights (as defined below) which generate revenue. Live Units are a key driver of revenue, and a key measure of the scale of our business, which in turn drives our financial performance.

Growth in Live Units is driven by the number of units contracted in prior periods, and the lead time and opening period associated with making those units available to guests. The time from contract signing to building opening varies widely, ranging from relatively short periods for hotels that already meet our brand standards and/or that are already live hotels operating under another brand, to many months or even years for projects under renovation or construction. The number of Live Units at the end of a period is also affected by the number of ~~units~~Live Units that were ~~removed~~exited ~~from~~(i.e. ~~our~~no ~~portfolio~~longer available for guest stays) during that same period. Sonder exits Live Units from time to time for a variety of reasons, ~~which~~including weto ~~refer~~mitigate losses related to certain underperforming properties, such as ~~dropped~~in ~~units~~connection with the portfolio optimization program.

The decrease in Live Units from ~~September~~March 3031, ~~2023~~2024 to ~~September~~March 3031, ~~2024~~2025 was driven by our portfolio optimization program and ~~reduction~~the termination of ~~Live~~certain ~~Units~~lease ~~thereof~~agreements. As of ~~September~~March 3031, ~~2024~~2025, our five largest cities (New York City, Dubai, Montreal, Los Angeles, and London) accounted for approximately 38.6% of our Live Units, and our 10 largest cities accounted for approximately 61.2% of our Live Units. The decrease in Total Portfolio from March 31, 2024 to March 31, 2025 was also driven by our portfolio optimization program and the termination of certain lease agreements.

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Montreal, Miami, and London) accounted for approximately 36.7% of our Live Units, and our 10 largest cities accounted for approximately 58.7% of our Live Units. The decrease in Total Portfolio from September 30, 2023 to September 30, 2024 was also driven by our portfolio optimization program.

Bookable Nights / Occupied Nights

Bookable Nights represent the total number of nights available for stays across all Live Units. ~~This excludes nights lost to full building closures of greater than 30 nights.~~ Occupied Nights represent the total number of nights occupied across all Live Units. Occupancy Rate (“OR”) is calculated as Occupied Nights divided by Bookable Nights. Bookable Nights, Occupied Nights, and OR are key drivers of revenue, which in turn drives financial performance.

The decrease in Bookable Nights and Occupied Nights from the three months ended ~~September~~March 3031, ~~2023~~2024 to the three months ended ~~September~~March 3031, ~~2024~~2025 ~~and from the nine months ended September 30, 2023 to the nine months ended September 30, 2024~~ was largely driven by the portfolio optimization program and the termination of certain lease agreements.

RevPAR and Average Daily Rate

RevPAR represents the average revenue earned per available night and can be calculated either by dividing revenue by Bookable Nights, or by multiplying ADR by OR. ADR represents the average revenue earned per night occupied and is calculated as Revenue divided by Occupied Nights. RevPAR and ADR are key drivers of revenue, and key measures of our ability to attract and retain guests, which in turn drives financial performance.

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Several factors may explain period-to-period RevPAR variances, including:

•Live Units that became live in recent months and have not yet reached mature economics. Typically, new Live Units take ~~several~~twelve months to achieve mature ADR and OR as buildings stabilize and drive organic bookings. If a period has a significant increase in Live Units, this may ~~reduce~~adversely ~~the~~impact ~~portfolio’s~~total RevPAR.

•Market mix represents the composition of our portfolio based on geographic presence. Certain markets such as New York or London typically earn higher RevPARs, while certain other markets such as ~~Houston or~~ Phoenix typically earn lower RevPARs. Therefore, if the market mix shifts toward lower RevPAR markets, it may adversely impact ~~the~~total ~~portfolio’s~~ RevPAR.

•Product mix represents the composition of our portfolio between apartment and hotel style units. In general, ~~apartments~~apartment ~~are~~style ~~higher~~units ~~RevPAR~~typically ~~bookings~~earn higher RevPARs because they typically offer more amenities (e.g., kitchen, in-unit washer/dryer) and have higher square footage compared to hotel style units. Therefore, if the product mix shifts towards hotel style units, it may reduce the average portfolio-wide RevPAR.

•Seasonality drives typical period-to-period variances in a particular property’s RevPAR depending upon seasonal factors (e.g., weather patterns, local attractions and events, holidays) as well as property location and type. ~~Based~~Total ~~on results prior to the COVID-19 pandemic,~~ RevPAR tends to be lower ~~across our portfolio~~ in the first quarter and fourth ~~quarters~~quarter of each year due to seasonal factors such as weather and holidays and the market mix and product mix of our ~~portfolio~~live properties at the time. However, the effect of seasonality ~~will~~could vary as our market mix and product mix continues to evolve.

The ~~increases~~increase in RevPAR from the three ~~and nine~~ months ended ~~September~~March 3031, ~~2023~~2024 to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025, respectively, ~~were~~was driven by the impact of the portfolio optimization program, the termination of certain lease agreements, broader travel industry trends, product mix between hotels and apartments, geographic mix, and the impact of corporate sales and pricing strategies.

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Results of Operations

Three months ended ~~September~~March 3031, ~~2024~~2025 compared to three months ended ~~September~~March 3031, ~~2023~~2024

The following table sets forth our results of operations as a percentage of revenue (in thousands, except percentages):

	Three months ended September 30,
	Three months ended March 31,
	2024				2023
	2025				2024
Revenue	$	~~162~~118,~~114~~856	100.0	%	$	~~160~~133,~~896~~479	100.0	%
Cost of revenue (excluding depreciation and amortization)	9296,~~991~~849		5781.45	%	~~103~~100,~~374~~363		6475.2	%
Operations and support	4538,~~292~~032		2732.90	%	5049,~~376~~980		3137.34	%
General and administrative	2926,~~731~~817		1822.36	%	3024,~~548~~285		1918.02	%
Research and development	43,~~427~~938		23.73	%	54,~~344~~671		3.35	%
Sales and marketing	2215,~~292~~322		1312.89	%	2019,~~996~~249		1314.04	%
Impairment loss	—		—	%	1,087		0.7	%
Integration cost	1,539		1.3	%	—		—	%
Restructuring and other charges	~~1,304~~—		~~0.8~~—	%	122,592		—1.9	%
Total costs and operating expenses	$	~~196~~182,~~037~~497	~~120~~153.95	%	$	~~211~~201,~~737~~140	~~131~~150.67	%
Loss from operations	$	(3363,~~923~~641)	(2053.95)	%	$	(5067,~~841~~661)	(3150.67)	%
Total non-operating (income) expense, net	145,266		89.6	%	6,714		4.2	%
Total non-operating income, net	(7,863)		(6.6)	%	(17,361)		(13.0)	%
(Income) loss before income taxes	(179,189)		(110.5)	%	(57,555)		(35.8)	%
Loss before income taxes	(55,778)		(46.9)	%	(50,300)		(37.7)	%
Provision (benefit) for income taxes	~~202~~717		0.16	%	75187		—0.1	%
Net income (loss)	$	(179,391)	(110.7)	%	$	(57,630)	(35.8)	%
Net loss	$	(56,495)	(47.5)	%	$	(50,487)	(37.8)	%
Other comprehensive income (loss):
Other comprehensive loss:
Change in foreign currency translation adjustment	$	(53,~~439~~199)	(32.47)	%	$	~~3,547~~(589)	2(0.24)	%
Comprehensive income (loss)	$	(184,830)	(114.0)	%	$	(54,083)	(33.6)	%
Comprehensive loss	$	(59,694)	(50.2)	%	$	(51,076)	(38.3)	%

Revenue

The following table sets forth our revenue (in thousands, except percentages):

	Three months ended September 30,				Change
	Three months ended March 31,				Change
	2024		2023		$		%
	2025		2024		$		%
Revenue	$	~~162~~118,~~114~~856	$	~~160~~133,~~896~~479	$	1(14,~~218~~623)	0(11.80)	%

Revenue ~~increased~~decreased, primarily due to a 1420.36% ~~increase~~decrease in ~~RevPAR~~Bookable ~~partially~~Nights ~~offset~~and by a 1213.03% decrease in ~~Bookable~~Occupied Nights., ~~The~~partially ~~increase~~offset inby ~~RevPAR~~a ~~was~~13.0% ~~driven~~increase byin ~~the~~RevPAR. ~~portfolio~~The ~~optimization~~decrease ~~program,~~in ~~broader~~Bookable ~~travel~~Nights ~~industry~~is ~~trends,~~the ~~product~~result ~~mix~~of ~~between~~Live ~~hotels~~Units ~~and~~exited ~~apartments,~~from ~~geographic~~the ~~mix,~~portfolio ~~cohort~~optimization ~~mix~~program and the ~~impact~~termination of ~~corporate~~certain ~~sales~~lease ~~and pricing strategies~~agreements. The ~~decrease~~increase in ~~Bookable~~RevPAR ~~Nights~~was isprimarily ~~the~~driven ~~result~~by of the portfolio optimization program, the termination of certain lease agreements, and broader travel industry trends.

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Costs and Operating Expenses

The following table sets forth our total costs and operating expenses (in thousands, except percentages):

	Three months ended September 30,				Change
	Three months ended March 31,				Change
	2024		2023		$		%
	2025		2024		$		%
Cost of revenue (excluding depreciation and amortization)	$	9296,~~991~~849	$	~~103~~100,~~374~~363	$	(103,~~383~~514)	(103.05)	%
Operations and support	4538,~~292~~032		5049,~~376~~980		(511,~~084~~948)		(1023.19)	%
General and administrative	2926,~~731~~817		3024,~~548~~285		~~(817)~~2,532		(210.7)4	%
Research and development	43,~~427~~938		54,~~344~~671		(~~917~~733)		(1715.27)	%
Sales and marketing	2215,~~292~~322		2019,~~996~~249		1(3,~~296~~927)		6(20.24)	%
Impairment loss	—		1,087		(1,087)		(100.0)	%
Integration costs	1,539		—		1,539		100.0	%
Restructuring and other charges	~~1,304~~—		122,592		1(2,~~292~~592)		~~10766~~(100.70)	%
Total costs and operating expenses	$	~~196~~182,~~037~~497	$	~~211~~201,~~737~~140	$	(1518,~~700~~643)	(79.43)	%

Cost of Revenue (excluding depreciation and amortization): Cost of revenue decreased, primarily due to (i) a $104.98 million decrease in rent expense due to the decrease in Live Units driven by the portfolio optimization program and the termination of certain lease agreements, (ii) a $0.5 million decrease in cleaning expenses as a result of the decrease in Bookable Nights and Live Units, and offset by (iii) a $1.5 million increase in other cost of revenue expenses.

Operations and support: The decrease in operations and support was primarily due to: (i) a $24.35 million decrease in ~~employee compensation cost, due to a decrease in average headcount, (ii) a $1.6 million decrease in~~ unit-related expenses primarily representing smaller non-capitalized items for the units such as bedding, decor, furniture and lighting, ~~and~~(ii) a $3.1 million decrease in employee compensation cost, due to a decrease in average headcount, (iii) a $1.35 million decrease in pre-opening costs due primarily to the timing of costs related to onboarding new units in the three months ended ~~September~~March 3031, ~~2024~~2025 compared to the three months ended ~~September~~March 3031, ~~2023~~2024, ~~and~~ (iv) ~~partially offset by multiple less significant amounts and~~ a $21.24 million ~~increase~~decrease in ~~taxes~~depreciation ~~due~~and ~~primarily~~(v) tothe ~~property~~cumulative ~~tax~~impact ~~assessments~~of other less significant items.

General and administrative: General and administrative ~~decreased~~increased, primarily due to: (i) (a) a $63.94 million ~~decrease~~increase in ~~employee~~credit ~~compensation~~loss ~~cost~~expense, primarily due to aincreased ~~decrease~~aging inon ~~average~~receivables ~~headcount,~~from several corporate housing customers and (iib) a $32.86 million increase in ~~taxes,~~audit ~~primarily~~and ~~value~~advisory ~~added~~fees, ~~taxes~~partially offset by ~~property~~(ii) ~~taxes,~~ (~~iii~~a) a $13.2 million decrease in ~~insurance~~employee ~~and~~compensation ~~(iv)~~cost ~~the~~primarily ~~cumulative~~due ~~impact~~to ~~of other less significant expense decreases; partially offset by~~ a ~~$5.8~~decrease ~~million increase~~ in ~~legal~~average headcount and ~~professional~~(b) ~~fees related to corporate matters which includes one-time fees associated with~~ the ~~strategic~~cumulative ~~licensing~~impact ~~agreement~~of ~~with~~other ~~Marriott~~less ~~and~~significant ~~financing deals, all announced in August 2024~~items.

Research and development: Research and development ~~decreased~~increased, primarily due to: (i) a $0.46 million decrease in ~~depreciation,~~employee ~~primarily~~compensation ~~due~~expense, todriven by a decrease in ~~capitalized~~average ~~software~~headcount ~~costs,~~ (ii) a $0.23 million decrease in ~~computer software expense~~depreciation, ~~and~~primarily ~~(iii)~~due to a ~~$0.4 million~~ decrease in ~~employee~~capitalized ~~compensation~~software ~~expense~~costs, and ~~driven~~(iii) by a ~~decrease in average headcount, partially offset by a~~ $0.12 million ~~increase~~decrease in ~~legal~~computer ~~and~~software ~~professional fees~~expense.

Sales and marketing: The ~~increase~~decrease in sales and marketing was primarily due to: (i) a $02.65 million ~~increase~~decrease in performance marketing expense, and (ii) a $1.5 million decrease in channel transaction fees resulting from ana ~~increase~~decrease in revenue booked through third-party OTAs, consistent with the total revenue ~~growth, and (ii) a $0~~decrease.~~4 million increase in performance marketing expense.~~

~~Impairment~~Integration ~~Loss~~costs: ~~Impairment~~ ~~losses~~For ~~decreased~~the three months ended March 31, ~~primarily~~2025, ~~due~~the tointegration ~~improved~~costs ~~factors~~consisted ~~related~~of tocosts associated with the ~~valuation~~Marriott ofAgreement ~~our~~as ~~operating~~they ~~lease~~pertain ~~right-of-use~~to ~~(“ROU”)~~integration ~~assets~~related items, ~~that~~such ~~triggered~~as anlegal ~~impairment~~fees ~~charge~~and ~~recognized~~other byorganizational ~~the~~related ~~Company~~costs. inFor the ~~corresponding~~three ~~prior~~months ~~period~~ended March 31, 2024, there were no associated integration costs.

40Restructuring and other charges: The aggregate adjustment for expenses associated with our restructuring plans as discussed in Note 14, Restructuring Activities, to our financial statements as presented.

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Restructuring and other charges: For the three months ended September 30, 2023, the restructuring and other charges consists certain adjustments related to the employee termination benefits as a result of the restructuring announced on March 1, 2023. The majority of the restructuring charges were recognized in the first quarter of 2023. For the three months ended September 30, 2024, this represents the residual restructuring and other charges for employee termination benefits as a result of a restructuring announced on February 20, 2024. The entirety of the increase in restructuring and other charges is due to the difference in amounts recognized for each of the restructurings discussed above.

Total Non-Operating Expense, Net

The following table sets forth our total non-operating (income) expense, net (in thousands, except percentages):

	Three months ended September 30,				Change
	Three months ended March 31,				Change
	2024		2023		$		%
	2025		2024		$		%
Interest expense, net	$	9,~~256~~449	$	67,~~423~~323	$	2,~~833~~126	4429.10	%
Change in fair value of SPAC Warrants	24		(276)		300		(108.7)	%
Lease adjustment gains, net	(11,138)		(23,901)		12,763		(53.4)	%
Change in fair value of Earn Out Liability	11		(209)		220		(105.3)	%
Other income, net	(6,174)		(783)		(5,391)		688.5	%
Lease adjustment gains, net	(555)		(139)		(416)		299.3	%
Total non-operating expense, net	$	(7,863)	$	(17,361)	$	9,498	(54.7)	%
Loss on preferred stock issuance	59,490		—		59,490		—	%
Change in fair value of forward contracts	86,570		—		86,570		—	%
Other income, net	(9,530)		915		(10,445)		(1141.5)	%
Total non-operating expense, net	$	145,266	$	6,714	$	138,552	2063.6	%

Interest expense, net. Interest expense, net increased, primarily due to interest expense recognized on the Company’s Delayed Draw Notes.

~~Change~~Lease inadjustment ~~fair~~gains, ~~value of SPAC Warrants~~net. The ~~change~~lease inadjustment ~~the~~gain ~~fair value of the SPAC Warrants~~ is ~~impacted~~due byto the ~~initial~~residual ~~recognition~~impact of, ~~and~~lease ~~subsequent fair value adjustments to, the SPAC Warrants~~terminations. The ~~change~~Company in ~~the~~2024 ~~fair~~had ~~value~~undertaken ofan ~~this~~initiative ~~line~~to ~~item~~renegotiate ~~resulted~~or ~~primarily~~exit ~~from~~certain aproperties ~~decrease~~where inthere ~~our~~exists ~~stock~~unfavorable ~~price~~lease ~~period-over-period~~terms.

~~Change~~Other inincome, ~~fair value of Earn Out Liability~~net. The change in ~~the~~other ~~fair~~income, ~~value~~net ofis ~~the~~primarily ~~Earn~~due ~~Out~~to ~~Liability~~$3.0 million isin ~~impacted~~cash byreceived ~~the~~from ~~initial~~lease ~~recognition of~~terminations, ~~and~~as ~~subsequent~~well ~~fair~~as ~~value~~fluctuations ~~adjustments~~in ~~to,~~foreign ~~the~~currency ~~Earn~~rates ~~Out~~which ~~Liability.~~impacted ~~The change in~~ the ~~fair~~remeasurement ~~value~~ of ~~this~~foreign ~~line~~balances ~~item~~to ~~resulted~~reporting ~~from a decrease in our stock price period-over-period~~currency.

Lease adjustment (gain) loss. The lease adjustment (gain) loss is due to the residual impact of lease terminations. The Company in 2024 has undertaken an initiative to renegotiate or exit certain properties where there exists unfavorable lease terms.

Loss on preferred stock issuance. The loss on preferred stock issuance of $58.2 million was recorded for the three months ended September 30, 2024, attributable to the Securities Purchase Agreements entered into by the Company on August 13, 2024. The agreement provided for 43.3 million newly issued shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), in exchange for cash consideration in an aggregate amount of approximately $43.3 million. The shares were valued in excess of the proceeds received as part of the transaction. The Company identified the following two freestanding financial instruments issued in connection with the transaction, a) Mezzanine equity-classified Series A Convertible Preferred Stock and b) Liability-classified forward contract for commitments of investors to purchase, and commitments of the Company to sell additional Series A Convertible Preferred Stock. As of the transaction inception, these instruments had an aggregate fair value of $72.9 million and the Company received $14.7 million from the first tranche closing, resulting in the $58.2 million loss on preferred stock issuance. No similar loss was recognized during the three months ended September 30, 2023, as no issuance of this nature occurred.

The Securities Purchase Agreements also grants the Purchasers the right to purchase up to 25% of any equity offering within the next five years (a “Subsequent Financing”). The Purchasers are entitled to participate on a pro-rata basis (determined by their proportionate participation in the Private Placement) at a purchase price equal to 75% of the purchase price of any other investor in such Subsequent Financing. The Company recognized a liability for this preferred stock participation right of $1.3 million within other current liabilities in the condensed consolidated balance sheets as of September 30, 2024. The Company recognized a change in fair value of the participation right of $12 thousand as the

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remeasurement reflecting fluctuations in the underlying variables and assumptions from inception on August 13, 2024 through the quarter ended on September 30, 2024.

Change in fair value of forward contracts. As part of the Securities Purchase Agreements entered into by the Company on August 13, 2024, the transaction included a Liability-classified forward contract for commitments of investors to purchase, and commitments of the Company to sell additional Series A Convertible Preferred Stock. The change in fair value of the forward contract of $86.6 million represents the remeasurement reflecting fluctuations in the underlying variables and assumptions from inception on August 13, 2024 through the quarter ended on September 30, 2024. No similar change in fair value of forward contract was recognized during the three months ended September 30, 2023, as no issuance of this nature occurred.

Other income, net. The change in other income, net is primarily due to fluctuations in foreign currency rates which impacted the remeasurement of foreign balances to reporting currency.

Provision for Income Taxes

As of ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, we have recorded a full valuation allowance against our deferred tax assets due to our history of losses.

The following table sets forth the provision for income taxes (in thousands, except percentages):

	Three months ended September 30,				Change
	Three months ended March 31,				Change
	2024		2023		$		%
	2025		2024		$		%
Provision for income taxes	$	~~202~~717	$	75187	$	~~127~~530	~~169~~283.34	%

The provision for income taxes increased, primarily as a result of taxes to operations in foreign jurisdictions.

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

The following table sets forth our results of operations as a percentage of revenue (in thousands, except percentages):

	Nine months ended September 30,
	2024				2023
Revenue	$	460,194	100.0	%	$	437,802	100.0	%
Cost of revenue (excluding depreciation and amortization)	288,006		62.6	%	289,947		66.2	%
Operations and support	141,683		30.8	%	154,426		35.3	%
General and administrative	83,288		18.1	%	92,937		21.2	%
Research and development	13,491		2.9	%	17,289		3.9	%
Sales and marketing	63,113		13.7	%	54,894		12.5	%
Impairment loss	—		—	%	1,087		0.2	%
Restructuring and other charges	3,896		0.8	%	2,119		0.5	%
Total costs and operating expenses	$	593,477	129.0	%	$	612,699	139.9	%
Loss from operations	$	(133,283)	(29.0)	%	$	(174,897)	(39.9)	%
Total non-operating expense, net	63,222		13.7	%	8,655		2.0	%
Loss before income taxes	(196,505)		(42.7)	%	(183,552)		(41.9)	%
Provision for income taxes	626		0.1	%	127		—	%
Net loss	$	(197,131)	(42.8)	%	$	(183,679)	(42.0)	%
Other comprehensive loss:
Change in foreign currency translation adjustment	$	(4,633)	(1.0)	%	$	(3,249)	(0.7)	%
Comprehensive loss	$	(201,764)	(43.8)	%	$	(186,928)	(42.7)	%

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Revenue

The following table sets forth our revenue (in thousands, except percentages):

	Nine months ended September 30,				Change
	2024		2023		$		%
Revenue	$	460,194	$	437,802	$	22,392	5.1	%

Revenue increased primarily due to a 1.3% increase in RevPAR and a 3.8% increase in Bookable Nights. The increase in RevPAR was driven by the portfolio optimization program, broader industry trends, product mix between hotels and apartments, geographic mix, cohort mix and the impact of corporate sales and pricing strategies. The increase in Bookable Nights was driven by the timing of Live Unit growth relative to Live Unit decline from the portfolio optimization program.

Costs and Operating Expenses

The following table sets forth our total costs and operating expenses (in thousands, except percentages):

	Nine months ended September 30,				Change
	2024		2023		$		%
Cost of revenue (excluding depreciation and amortization)	$	288,006	$	289,947	$	(1,941)	(0.7)	%
Operations and support	141,683		154,426		(12,743)		(8.3)	%
General and administrative	83,288		92,937		(9,649)		(10.4)	%
Research and development	13,491		17,289		(3,798)		(22.0)	%
Sales and marketing	63,113		54,894		8,219		15.0	%
Impairment loss	—		1,087		(1,087)		(100.0)	%
Restructuring and other charges	3,896		2,119		1,777		83.9	%
Total costs and operating expenses	$	593,477	$	612,699	$	(19,222)	(3.1)	%

Cost of Revenue (excluding depreciation and amortization): Cost of revenue decreased primarily due to: (i) a $6.2 million decrease in rent expense due to the portfolio optimization program, (ii) a $2.7 million increase in cleaning expenses as a result of an increase in the number of checkouts, (iii) a $1.5 million increase in other cost of revenue expenses, and (iv) a $0.1 million increase in credit card fees due to an increase in bookings.

Operations and support: The decrease in operations and support was primarily due to: (i) a $5.7 million decrease in unit-related expenses primarily smaller non-capitalized items for the units such as bedding, decor, furniture and lighting, (ii)

a $5.1 million decrease in employee compensation cost, due to a decrease in average headcount, (iii) a $3.5 million decrease in legal and professional fees, and (iv) a $1.9 million decrease in depreciation expense, partially offset by the cumulative impact of other less significant expense increases.

General and administrative: General and administrative expenses decreased, primarily due to: (i) a $21.1 million decrease in employee compensation cost, due to a decrease in average headcount, (ii) a $3.2 million decrease in unit related costs due to the decrease in Live Units, (iii) a $2.5 million decrease in facilities expense related to a reduction on office space and related rent, (iv) additional less significant decreases in insurance, depreciation and other, partially offset by a $14.3 million increase in legal and professional expenses related to corporate matters which includes one-time fees associated with the strategic licensing agreement with Marriott and financing deals, all announced in August 2024 and a $6.8 million increase in taxes primarily related to value added taxes.

Research and development: Research and development decreased, primarily due to (i) a net $2.3 million decrease in employee compensation driven by a decrease in average headcount, and (ii) a $1.3 million decrease in depreciation, primarily due to a decrease in capitalized software costs.

Sales and marketing: The increase in sales and marketing was primarily due to: (i) a $3.9 million increase in performance marketing expense, and (ii) a $3.2 million increase in channel transaction fees resulting from an increase in revenue booked through third-party OTAs, consistent with total revenue growth.

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Impairment loss: Impairment loss decreased, primarily due to improved factors related to the valuation of our operating lease right-of-use (“ROU”) assets, that triggered an impairment charge recognized by the Company in the corresponding prior period.

Restructuring and other charges: For the nine months ended September 30, 2023, the restructuring and other charges consists primarily of employee termination benefits as a result of the restructuring announced on March 1, 2023. For the nine months ended September 30, 2024, the restructuring and other charges consists of employee termination benefits as a result of a restructuring announced on February 20, 2024. The entirety of the increase in restructuring and other charges is due to the difference in amounts recognized for each of the restructurings discussed above.

Total Non-Operating Expense, Net

The following table sets forth our total non-operating expense, net (in thousands, except percentages):

	Nine months ended September 30,				Change
	2024		2023		$		%
Interest expense, net	$	24,595	$	18,285	$	6,310	34.5	%
Change in fair value of SPAC Warrants	7		(674)		681		(101.0)	%
Change in fair value of Earn Out Liability	(5)		(2,142)		2,137		(99.8)	%
Lease adjustment gains, net	(95,579)		(8,576)		(87,003)		*
Loss on preferred stock issuance	59,490		—		59,490		—	%
Change in fair value of forward contract	86,570		—		86,570		—	%
Other (income) expense, net	(11,856)		1,762		(13,618)		(772.9)	%
Total non-operating expense, net	$	63,222	$	8,655	$	54,567	630.5	%

*Due to the significance of the change, the percentage is not considered meaningful.

Interest expense, net. Interest expense, net increased primarily due to interest expense recognized on the Company’s Delayed Draw Notes.

Change in fair value of SPAC Warrants. The change in the fair value of this line item resulted primarily from a decrease in our stock price period-over-period.

Change in fair value of Earn Out Liability. The change in the fair value of this line item resulted from a decrease in our stock price period-over-period.

Lease adjustment gains, net. The lease adjustment gains, net is due to the residual impact of lease terminations. The Company in 2024 has undertaken an initiative to renegotiate or exit certain properties where there exists unfavorable lease terms.

Loss on preferred stock issuance. The loss on preferred stock issuance of $58.2 million was recorded for the nine months ended September 30, 2024, attributable to the Securities Purchase Agreements entered into by the Company on August 13, 2024. The agreement provided for 43.3 million newly issued shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), in exchange for cash consideration in an aggregate amount of approximately $43.3 million. The shares were valued in excess of the proceeds received as part of the transaction. The Company identified the following two freestanding financial instruments issued in connection with the transaction, a) Mezzanine equity-classified Series A Convertible Preferred Stock and b) Liability-classified forward contract for commitments of investors to purchase, and commitments of the Company to sell additional Series A Convertible Preferred Stock. As of the transaction inception, these instruments had an aggregate fair value of $72.9 million and the Company received $14.7 million from the first tranche closing, resulting in the $58.2 million loss on preferred stock issuance. No similar loss was recognized during the nine months ended September 30, 2023, as no issuance of this nature occurred.

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price of any other investor in such Subsequent Financing. The Company recognized a liability for this preferred stock participation right of $1.3 million within other current liabilities in the condensed consolidated balance sheets as of September 30, 2024. The Company recognized a change in fair value of the participation right of $12 thousand as the remeasurement reflecting fluctuations in the underlying variables and assumptions from inception on August 13, 2024 through the quarter ended on September 30, 2024.

Change in fair value of forward contracts. As part of the Securities Purchase Agreements entered into by the Company on August 13, 2024, the transaction included a Liability-classified forward contract for commitments of investors to purchase, and commitments of the Company to sell additional Series A Convertible Preferred Stock. The change in fair value of the forward contract of $86.6 million represents the remeasurement reflecting fluctuations in the underlying variables and assumptions from inception on August 13, 2024 through the quarter ended on September 30, 2024. No similar change in fair value of forward contract was recognized during the nine months ended September 30, 2023, as no issuance of this nature occurred.

Other (income) expense, net. The change in other (income) expense, net is primarily due to fluctuations in foreign currency rates which impacted the remeasurement of foreign balances to reporting currency.

Provision for Income Taxes

The following table sets forth the provision for income taxes (in thousands, except percentages):

	Nine months ended September 30,				Change
	2024		2023		$		%
Provision for income taxes	$	626	$	127	$	499	392.9	%

The provision for income taxes increased, primarily as a result of growth of our operations and taxable income in foreign jurisdictions.

Non-GAAP Financial Measures

We prepare our consolidated financial statements in conformity with ~~accounting principles generally accepted in the United States of America (“~~GAAP~~” or “U~~.S. ~~GAAP”).~~ However, some of the financial measures discussed herein are non-GAAP financial measures. In accordance with SEC rules, we classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP in our condensed consolidated statements of operations and comprehensive ~~income (~~loss), balance sheets, or statements of cash flows.

To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: Adjusted FCF, Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization, and Operating Lease Related Rent Charges (“Adjusted EBITDAR”) (collectively, the “non-GAAP financial measures”). We may periodically review and update our non-GAAP financial measures based on our determination of their relevance to our business which could result in the addition or elimination of select non-GAAP financial measures in the future.

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Adjusted Free Cash Flow (Adjusted FCF)

The following table presents the calculation of Adjusted FCF (in thousands):

	Nine months ended September 30,
	Three months ended March 31,
	2024		2023
	2025		2024
Cash used in operating activities	$	(904,~~451~~353)	$	(7240,~~537~~309)
Cash used in investing activities	(~~2,095~~959)		(~~12,436~~716)
FCF, including cash paid for lease terminations, restructuring, and professional fees	$	(925,~~546~~312)	$	(8441,~~973~~025)
Cash paid for lease termination costs	14,335		—
Cash received for lease terminations	(2,950)		—
Cash paid for restructuring costs	2,965		2,150
Cash paid for lease termination costs	861		10,526
Cash paid for non-recurring professional fees	11,300		—
Cash paid for restructuring costs	—		1,727
Adjusted FCF	$	(63,946)	$	(82,823)
Cash paid for non-recurring professional fees	—		253
Cash paid for integration costs	543		—
Adjusted FCF	$	(6,858)	$	(28,519)

We define Adjusted FCF ~~represents~~as cash used in operating activities plus cash used in investing activities, excluding the impact of lease terminations, restructuring, and non-recurring professional fee charges related to non-operational activities. The most directly comparable GAAP financial measures are cash used in operating activities when combined with cash used investing activities. Our near-term focus is to reach sustainable positive Adjusted FCF as detailed in our Cash Flow Positive Plan.

We believe Adjusted FCF is meaningful to investors as it is the primary liquidity measure that we focus on internally to evaluate our progress towards the objectives outlined in our Cash Flow Positive Plan. We believe that achieving our goals around this measure will put us on a path to financial sustainability and will help fund our future growth.

Our Adjusted FCF ~~measures~~measure may differ from similarly titled measures used by other companies due to different methods of calculation. Presentation of these measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, this measure may not provide a complete understanding of our cash flow as a whole. As such, these measures should be reviewed in conjunction with our GAAP cash flow.

The change in Adjusted FCF period-over-period represented a 2276.80% increase, primarily driven by ~~increased~~a ~~adjustments for cash paid for lease terminations, restructuring and professional fees totaling~~ $2636.50 million, aimprovement ~~decrease~~ in cash used in ~~investing~~operating activities ofexcluding ~~$10.3 million and offset by an increase in~~ cash ~~used~~paid infor ~~operating~~specific ~~activities~~items of(lease ~~$17.9~~termination ~~million.~~costs, ~~Refer~~restructuring tocosts, ~~the~~non-recurring ~~section~~professional ~~entitled~~fees ~~“Liquidity~~ and ~~Capital~~integration ~~Resources~~costs) –due ~~Cash~~to ~~Flow~~improved ~~Information”~~property ~~below~~profitability ~~for~~from ~~further discussion surrounding~~ the ~~changes~~portfolio inoptimization ~~our~~program ~~cash~~and ~~flow~~other ~~figures~~cost ~~period-over-period~~savings measures.

Refer to the section entitled “Liquidity and Capital Resources – Cash Flow Information” below for further discussion surrounding the changes in our cash flow figures period-over-period.

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Adjusted EBITDA

WeThe ~~define~~following ~~Adjusted~~table ~~EBITDA~~presents ~~as net income (loss) as adjusted to eliminate~~ the ~~impact~~calculation of ~~net~~Adjusted ~~interest~~EBITDA ~~expense, provision for income taxes, depreciation and amortization expense, and certain other items as indicated. The exclusion of these items and other similar items~~ (in ~~our non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. The indicated other items excluded are as follows~~thousands):

Stock-based Compensation Expense. Non-cash, stock-based compensation expense relates to our equity plan. We exclude such expense when assessing the effectiveness of our operating performance since stock-based compensation does not necessarily correlate with the underlying operating performance of the business.


	Three months ended March 31,
	2025		2024
Net loss	$	(56,495)	$	(50,487)
Interest expense, net	9,449		7,323
Provision for income taxes	717		187
Depreciation and amortization expense	2,591		4,973
EBITDA	$	(43,738)	$	(38,004)
Stock-based compensation	2,269		3,009
Lease adjustment gains, net	(11,138)		(23,901)
Cash received for lease terminations	(2,950)		—
Integration costs	1,539		—
Restructuring and other related charges	—		2,592
Non-recurring professional fees	—		253
Gain on foreign exchange	(2,678)		(219)
Adjusted EBITDA	$	(56,696)	$	(56,270)

We define Adjusted EBITDA as net loss as adjusted to eliminate the impact of net interest expense, provision for income taxes, depreciation and amortization expense, and certain other items as indicated. The exclusion of these items and other similar items in our non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. The indicated other items excluded are as follows:

Stock-based compensation expense. Non-cash, stock-based compensation expense relates to our equity plan. We exclude such expense when assessing the effectiveness of our operating performance since stock-based compensation does not necessarily correlate with the underlying operating performance of the business.

Lease adjustment gains, net. These net gains reflect the impact of lease terminations and modifications.

~~Impairment~~Cash ~~loss.~~received ~~Impairment~~for ~~loss~~lease ~~includes~~terminations. ~~impairment~~Payments ~~charges~~received ~~recognized~~for settlements related to ~~the valuation of our operating~~ lease ~~right-of-use (“ROU”) assets~~terminations.

~~Loss~~Integration ~~on preferred stock issuance~~costs. The ~~loss~~integration oncosts ~~preferred~~consisted ~~stock~~of ~~issuance~~costs ~~was~~associated ~~recorded~~with ~~due to~~ the ~~Series~~Marriott AAgreement ~~Preferred~~as ~~Stock~~they ~~being~~pertain ~~valued~~to inintegration ~~excess~~related ~~of the proceeds received~~items, such as ~~part~~legal offees ~~the~~and ~~Securities~~other ~~Purchase~~organizational ~~Agreements~~related ~~transactions~~costs.

46Restructuring and other related charges. The aggregate adjustment for expenses associated with our restructuring plans as discussed in Note 14, Restructuring Activities, to our condensed consolidated financial statements as presented.

Professional fees. Non-recurring professional fees associated with special projects, including but not limited to the Marriott Agreement, financing activities, restatement, and other non-operating initiatives.

Gain on foreign exchange. The net effect of gains and losses resulting from holding assets and liabilities and conducting transactions denominated in currencies other than our subsidiaries’ functional currencies. Foreign exchange gains and losses are included in other income, net, in the condensed consolidated statements of operations and comprehensive loss.

We believe Adjusted EBITDA is meaningful to investors as it is the primary operating performance measure that we focus on internally to evaluate our core operating performance. Adjusted EBITDA provides a consistent basis for comparison across reporting periods by excluding interest, taxes, depreciation and amortization, and certain non-recurring or non-operational items, such as lease adjustment gains, net, integration costs such as legal fees and other organization related costs associated with the Marriott Agreement, restructuring and other related charges, professional fees related to discrete projects such as fees associated with the integration in connection with the strategic licensing agreement with Marriott and restatement activities, and gain on foreign exchange. It serves as a key measure for us to align the Company financial performance with our internal financial planning and analysis.

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Change in fair value of forward contract. The change in fair value of the liability-classified forward contract, which resulted from the commitments of investors to purchase, and commitments of the Company to sell, additional Series A Convertible Preferred Stock, as part of the Security Purchase Agreements.

Restructuring and other related charges. The aggregate adjustment for expenses associated with our restructuring plans as discussed in Note 14, Restructuring Activities, to our financial statements as presented.

Professional fees. One-time and/or non-recurring professional fees associated with special projects, including but not limited to our strategic licensing agreement with Marriott, financing activities, restatement, and other non-operating initiatives.

We believe Adjusted EBITDA is meaningful to investors as it is the primary operating performance measure that we focus on internally to evaluate our core operating performance. Adjusted EBITDA provides a consistent basis for comparison across reporting periods by excluding interest, taxes, depreciation and amortization, and certain one-time, non-recurring or non-operational items, such as lease adjustment gains, net, restructuring and other related charges, and professional fees related to discrete projects such as fees associated with the integration in connection with the strategic licensing agreement with Marriott and restatement activities. It serves as a key measure for us to align the Company financial performance with our internal financial planning and analysis.

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Net income (loss)	$	(179,391)	$	(57,630)	$	(197,131)	$	(183,679)
Interest expense, net	9,256		6,423		24,595		18,285
Provision for income taxes	202		75		626		127
Depreciation and amortization expense	3,385		5,882		13,350		18,908
EBITDA	$	(166,548)	$	(45,250)	$	(158,560)	$	(146,359)
Stock-based compensation	1,614		4,924		6,402		23,982
Lease adjustment gains, net	(555)		(139)		(95,579)		(8,576)
Impairment loss	—		1,087		—		1,087
Loss on preferred stock issuance(1)	59,490		—		59,490		—
Change in fair value of forward contract	86,570		—		86,570		—
Restructuring and other related charges	1,304		12		3,896		2,119
Non-recurring professional fees	5,728		—		12,605		—
Adjusted EBITDA	$	(12,397)	$	(39,366)	$	(85,176)	$	(127,747)

(1) Includes $1.3 million associated with the preferred stock participation right.

Adjusted EBITDAR

The following table presents the calculation of Adjusted EBITDAR (in thousands):


	Three months ended March 31,
	2025		2024
Adjusted EBITDA	$	(56,696)	$	(56,270)
Operating lease related rent charges	77,819		82,581
Adjusted EBITDAR	$	21,123	$	26,311

We define Adjusted EBITDAR as Adjusted EBITDA adjusted for operating lease related rent charges. We believe Adjusted EBITDAR is meaningful to investors as it is an operating performance measure that further enables us to assess our operating performance independent of operating leases, offering insights into our cash flow and performance.

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Adjusted EBITDA	$	(12,397)	$	(39,366)	$	(85,176)	$	(127,747)
Operating lease related rent charges	72,614		83,845		230,776		236,660
Adjusted EBITDAR	$	60,217	$	44,479	$	145,600	$	108,913

We believe these non-GAAP measures are helpful to investors by providing a clearer view of our core operations and allowing better comparability with other companies.

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Liquidity and Capital Resources

Going Concern Considerations

In accordance with ASC Topic 205-40, Going Concern, management evaluates whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern. This evaluation includes considerations related to the Company’s forecasted liquidity and cash consumption requirements for one year from the date of issuance of this Quarterly Report on Form 10-Q.

As discussed in Note 115, ~~Basis~~Subsequent ~~of Presentation~~Events, to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, the Company has, throughout ~~2024~~2025, announced a series of financing arrangements and cost optimization initiatives. Additionally, in August 2024, the Company entered into the Marriott Agreement, whereby the Company’s portfolio of properties is expected to join the Marriott system under a newly-created collection called “Sonder by Marriott Bonvoy.”

While the ~~2024~~2025 actions discussed in Note 115, ~~Basis~~Subsequent ~~of Presentation~~Events, demonstrate a series of material steps taken to improve the Company’s financial condition, the Company has a history of net losses and negative operating cash flows and expects to continue to incur additional losses in the near future. ~~Additionally,~~Although the ~~benefits of the~~ Company’s ~~recent~~continues ~~financing~~to ~~arrangements~~pursue ~~and~~a ~~licensing~~strategy ~~agreement~~to ~~are~~realize ~~contingent~~improved ~~upon~~operations, ~~the~~including ~~successful~~anticipated ~~execution~~improvements offrom aintegration ~~number~~through ofthe ~~critical~~Marriott ~~milestones.~~Agreement, ~~The~~the timing of ~~the~~realization ~~completion of these milestones~~ cannot be guaranteed to ensure liquidity is available when needed to meet the Company’s obligations. As a result of these considerations, ~~management has concluded that there is substantial doubt, which is not alleviated, about~~ the Company’s ~~ability~~liquidity tomay ~~continue~~be asinsufficient ato ~~going~~meet ~~concern~~its obligations for at least one year from the date of issuance of this Quarterly Report on Form 10-Q, which raises substantial doubt about the Company’s ability to continue as a going concern.

To address the substantial doubt about the Company's ability to continue as a going concern, as described above, the Company has embarked on the following actions:

•~~engaged~~engaging a financial advisor to assist in identifying and securing strategic alternatives and financing arrangements,;

•~~launched~~continuing a portfolio optimization program, which involves discussions with landlords about renegotiating the terms of our leases, including terminations, at certain properties; as of June 10, 2024, the Company has signed agreements to ~~exit~~focus oron ~~reduce~~identifying rent for approximately 105 buildings, or 4,300 units, which is expected to lead to estimated annualized run-rate FCF improvements of over $40.0 million of which the Company expects termination fees of less than $20.0 million associated with these agreements; of the approximately 80 buildings, or 3,200 units, with finalized exit agreements, the Company has exited approximately 70 buildings, or 2,800 units, as of September 30, 2024 and ~~expects~~executing tocost ~~exit~~optimization ~~the remaining buildings throughout the remainder of 2024 and 2025~~initiatives,

•~~implemented~~continuing ato ~~series~~execute ofour ~~deep~~portfolio ~~cost-cutting~~optimization ~~initiatives;~~program into ~~February~~mitigate ~~2024,~~losses ~~the~~related ~~Company~~to ~~announced~~certain aunderperforming ~~reduction~~properties inand ~~force plan affecting 17% of the corporate workforce, which is estimated~~ to ~~result~~assess ~~in approximately $11 million in annualized cost savings;~~ the Company’s ~~continues~~portfolio toof berents ~~focused~~relative onto ~~identifying~~current ~~and~~operations ~~executing cost optimization initiatives, including further rent reductions, better sourcing contracts that lower property-level direct costs,~~ and ~~further~~existing ~~savings~~market inrents; ~~overhead costs,~~and

•~~entered~~improving into the Marriott Agreement which allows us to integrate our properties with Marriott’s systems, distribution channels, and branding, and, subject to meeting certain conditions, entitles the Company to receive $15 million of Key Money in two tranches by March 31, 2025 of which we received $7.5 million on November 21, 2024; this agreement provides the opportunity for the Company to increase its financial performance through the potential to increase revenue by integrating with Marriott’s commercial engine, and deliver costs savings ~~through synergies and scale and power future growth,~~.

~~•received~~There ~~financing~~can ~~from~~be no assurances of the Company’s ~~existing~~ability ~~noteholders~~to inrealize ~~the~~these ~~amount~~plans. ofAs ~~$16~~a ~~million~~result, ~~during~~these ~~June~~conditions ~~and~~raise ~~July~~substantial ~~2024,~~doubt about the Company’s ability to continue as ~~previously~~a ~~announced,~~going ~~and~~concern for at least one year from the date of issuance of these financial statements.

•secured financing arrangements that provide the Company with access to approximately $139 million in additional liquidity, including

◦issuing approximately $43 million of Series A Preferred Stock to certain qualified institutional buyers or accredited investors, of which $14.7 million was received in August 2024 and an additional $28.6 million was received in November 2024,

◦approximately $83 million in additional liquidity, including $4 million in financing funded in August 2024, and approximately $79 million in the form of a 30-month extension (through the end of 2026) of the paid-in-kind feature of the Note Purchase Agreement (21 months of which is at Sonder’s option), and

◦other sources of liquidity totaling $13 million.

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Sources and Uses of Cash

At September 30, 2024, we had a cash balance, not including restricted cash, of $27.0 million, which was held for working capital purposes. Cash consists of checking and interest-bearing accounts. Reaching sustainable positive FCF is our primary focus in the near-term, as detailed in our Cash Flow Positive Plan. Once we reach sustainable positive FCF, we expect cash from operations will provide our principal source of liquidity. We generate cash from transactions with customers booking directly through Sonder.com and the Sonder app, which are settled through a payment processor, from transactions with third-party corporate customers which are settled based on contractual terms, and indirectly through OTAs, which are also settled based on contractual terms. The most significant source of liquidity in 2024 was cash inflows from both current period and future guest bookings. 49

WeTable ~~have~~of ~~incurred~~Contents losses since inception, and we expect to continue to incur additional losses in the future. Our operations to date have been financed primarily by private equity investments in our common and convertible preferred stock, convertible notes, and other note and warrant purchase agreements, as described in Note 6, Debt, and Note 15, Subsequent Events, in the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

WeAt ~~believe~~March 31, ~~that~~2025, ~~our~~we ~~existing~~had a cash onbalance, ~~hand~~not ~~combined~~including ~~with~~restricted ~~our~~cash, ~~anticipated~~of ~~estimated FCF may be insufficient to fund our operations and debt obligations for at least the next 12 months~~$23.3 ~~Our management has concluded there is substantial doubt about the Company’s ability to continue as a going concern~~million, which iswas ~~not~~held ~~alleviated,~~ for ~~one~~working ~~year~~capital ~~from~~purposes. ~~the~~Cash ~~date~~consists of ~~issuance~~checking ofand ~~this Quarterly Report on Form 10~~interest-Qbearing accounts. ~~Our~~Reaching ~~future~~sustainable ~~capital~~positive ~~requirements~~Adjusted ~~will~~FCF ~~depend~~is ona ~~many~~primary ~~factors,~~focus ~~including,~~in ~~but~~the ~~not limited to~~near-term, ~~our~~as ~~successful~~detailed ~~execution~~in ~~of a number of critical milestones required under~~ our ~~recent~~Cash ~~financing~~Flow ~~arrangements~~Positive ~~and~~Plan. ~~licensing~~Once ~~agreement,~~we ~~our~~reach ~~rate~~sustainable ofpositive ~~RevPAR~~Adjusted ~~growth~~FCF, ~~our~~we ~~ability~~expect tocash ~~achieve~~from ~~cost~~operations ~~efficiencies,~~will ~~our ability to~~ provide ~~security~~our ~~instruments~~principal ~~such~~source ~~as letters~~ of ~~credit~~liquidity. inWe ~~lieu~~generate of cash ~~deposits~~from ~~pursuant~~transactions towith ~~leases,~~customers ~~and~~booking ~~the~~directly ~~extent~~through ofSonder.com ~~real estate owners’ funding of capital expenditures~~ and ~~other pre-opening costs at our leased properties. To~~ the ~~extent~~Sonder ~~that~~app, ~~our~~which ~~existing cash balance and ongoing cash from operations~~ are ~~insufficient~~settled tothrough ~~fund~~a ~~our~~payment ~~future activities~~processor, wefrom ~~may~~transactions ~~need~~with tothird-party ~~raise~~corporate ~~additional~~customers ~~funds~~which ~~through~~are ~~public~~settled orbased ~~private~~on ~~equity~~contractual ~~or debt financing~~terms, ~~including~~and ~~convertible~~indirectly ~~debt,~~through ~~short-term bridge financing~~OTAs, orwhich ~~otherwise,~~are ~~but~~also ~~such~~settled ~~funds~~based ~~may not be available~~ on ~~acceptable~~contractual terms. IfThe ~~sufficient~~most ~~cash~~significant ~~from~~source ~~operations~~of orliquidity ~~external~~in ~~funding~~2025 iswas ~~not~~cash ~~available,~~inflows wefrom ~~may~~both becurrent ~~unable~~period ~~to adequately fund our business plans~~ and itfuture ~~could~~guest ~~have a negative effect on our business, operating cash flows, financial condition, and cash flows~~bookings.

~~Most~~We ofhave ~~our~~incurred ~~cash~~losses ~~was~~since ~~held in the United States as of September 30~~inception, ~~2024.~~and ~~Our~~we ~~foreign~~expect ~~subsidiaries~~to ~~held~~continue ~~approximately~~to ~~$5.3 million~~incur ofadditional ~~cash~~losses in ~~foreign~~the ~~jurisdictions~~future. WeOur ~~currently~~operations ~~do not intend or foresee a need~~ to ~~repatriate~~date ~~these~~have ~~foreign~~been ~~funds.~~financed Asprimarily aby ~~result~~private ofequity ~~the~~investments ~~Tax~~in ~~Cuts~~our common and ~~Jobs~~convertible ~~Act~~preferred ~~of 2017~~stock, ~~however~~convertible notes, weand ~~anticipate~~other ~~the~~note ~~U.S.~~and ~~federal~~warrant ~~tax~~purchase ~~impact~~agreements, toas bedescribed ~~minimal~~in ifNote ~~these~~6, ~~foreign~~Debt ~~funds are repatriated~~ and ~~would~~Note ~~not~~15, ~~repatriate~~Subsequent ~~funds~~Events, ~~where~~in ~~there~~the ~~was~~notes ato ~~material tax cost. In addition, based on~~ our ~~current~~unaudited ~~and~~condensed ~~future~~consolidated ~~needs,~~financial westatements ~~believe~~included ~~our~~in ~~current~~this ~~funding~~Quarterly ~~and~~Report ~~capital~~on ~~resources~~Form ~~for our international operations are adequate~~10-Q.

We believe that our existing cash on hand combined with our anticipated estimated Adjusted FCF may be insufficient to fund our operations and debt obligations for at least the next 12 months. Our management has concluded there is substantial doubt about the Company’s ability to continue as a going concern, which is not alleviated, for one year from the date of issuance of this Quarterly Report on Form 10-Q. Our future capital requirements will depend on many factors, including, but not limited to, the successful execution of any future financing arrangements, our rate of RevPAR growth, our ability to achieve cost efficiencies, our ability to provide security instruments such as letters of credit in lieu of cash deposits pursuant to leases, and the extent of real estate owners’ funding of capital expenditures and other pre-opening costs at our leased properties. To the extent that our existing cash balance and ongoing cash from operations are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing, including convertible debt, short-term bridge financing, or otherwise, but such funds may not be available on acceptable terms. If sufficient cash from operations or external funding is not available, we may be unable to adequately fund our business plans and it could have a negative effect on our business, operating cash flows, financial condition, and cash flows.

Most of our cash was held in the United States as of March 31, 2025. Our foreign subsidiaries held approximately $8.3 million of cash in foreign jurisdictions. We currently do not intend or foresee a need to repatriate these foreign funds. As a result of the Tax Cuts and Jobs Act of 2017, however, we anticipate the U.S. federal tax impact to be minimal if these foreign funds are repatriated and would not repatriate funds where there was a material tax cost.

Debt Arrangements

Debt arrangements, such as our credit facilities and Delayed Draw Notes, have been a source of cash for our day-to-day operations. Refer to Note 6, Debt and Note 15, Subsequent Events, in the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for discussion of our debt arrangements, including the timing of expected maturity of such arrangements. These arrangements include our 2022 Loan and Security Agreement which currently has a letter of credit sublimit of $45.0 million. As of September 30, 2024, because we are unable to satisfy the minimum consolidated adjusted EBITDA covenant, we are required to cash collateralize our obligations under the 2022 Loan and Security Agreement.

These arrangements included the 2022 Loan and Security Agreement, which was terminated on August 5, 2025. Prior to its termination, the 2022 Loan and Security Agreement had a letter of credit sublimit of $35.0 million and a revolving line of credit of $35.0 million. As of March 31, 2025, because we were unable to satisfy the minimum consolidated adjusted EBITDA covenant, we were required to cash collateralize our obligations under the 2022 Loan and Security Agreement.

Future Cash Obligations

Our estimated future obligations as of ~~September~~March 3031, ~~2024~~2025 include both current and long-term obligations. Our debt obligations, including both capitalized to-date and future paid-in-kind interest ~~through the election date of June 2024~~, totaled $~~316~~312.07 million, of which, $1.0 million was short-term, and the remainder was long-term. Interest on the foregoing debt obligations is payable in cash after the ~~June~~expiration ~~2024~~of ~~election~~the ~~date~~Company’s ability to elect paid-in-kind interest, which has been extended through December 31, 2026. Additionally, we had $4740.56 million of irrevocable standby letters of credit outstanding which were collateralized by our restricted cash, all of which represents a long-term cash obligation. Under our operating leases as discussed in Note 8, Leases, in the notes to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, we had a current obligation of $~~170~~168.08 million and a long-term obligation of $10.19 billion as of ~~September~~March 3031, ~~2024~~2025.

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Operating lease obligations primarily represent the initial contracted term for leases that have commenced as of ~~September~~March 3031, ~~2024, not including any future optional renewal periods~~2025. In addition, as of ~~September~~March 3031, ~~2024~~2025, we have entered into leases that have not yet commenced with future lease payments totaling $~~760~~544.0 million, excluding purchase options, that are not yet recorded on the condensed consolidated balance sheets and are not reflected in the figure above. These leases will commence between ~~2024~~2025 and ~~2029~~2026 with lease terms of ~~three~~five to 20 years. Certain leases do not have a scheduled commencement date, as they are currently subject to renegotiation.

AsThe ~~part~~Company ofhas ~~our efforts to reach positive FCF, we have~~ undertaken a portfolio optimization program, which involves discussions with landlords about renegotiating the terms of ~~our~~ leases primarily at certain ~~properties~~underperforming ~~and terminating certain leases~~properties. This process has resulted in and may continue to result in contract modifications resulting in changes to rent amounts, lease durations, or other provisions of our lease agreements and ~~has resulted and may result~~ in the termination of certain leases leading to the transition of certain properties over time and the incurrence of certain expenses, including but not limited to ~~termination fees and~~ impairment charges, which could be material.

Cash Flow Information

The following table sets forth our cash flows (in thousands):

	Nine months ended September 30,
	Three months ended March 31,
	2024		2023		$ Change
	2025		2024		$ Change
Net cash used in operating activities	$	(904,~~451~~353)	$	(7240,~~537~~309)	$	~~(17~~35,~~914)~~956
Net cash used in investing activities	(~~2,095~~959)		(~~12,436~~716)		~~10,341~~(243)
Net cash provided by financing activities	32,287		2,758		29,529
Net cash used in financing activities	(250)		(250)		—
Effects of foreign exchange on cash	~~(339)~~28		~~262~~(344)		~~(601)~~372
Net change in cash, cash equivalents, and restricted cash	$	(605,~~598~~534)	$	(8141,~~953~~619)	$	2136,~~355~~085

Operating Activities

Net cash used in operating activities ~~increased~~decreased significantly for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 as compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, primarily due to an ~~increase~~improvement in ~~cash~~working ~~paid for lease terminations~~capital, ~~restructuring, and professional fees~~ partially offset by ana ~~improvement~~slight decline in ~~our~~ operating loss performance ~~due~~on tothe ~~a 5~~11.10% ~~increase~~decrease in revenue. Cash used in operating activities is subject to variability period-over-period as a result of timing differences, including with respect to the collection of receivables and payments of interest expense, accounts payable, and other items~~, as well as variability in our stock price as it relates to fair value of the SPAC Warrants and Earn Out Liability~~.

Investing Activities

Net cash used in investing activities ~~decreased~~increased for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 as compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2023~~2024, primarily as a result of aan ~~decrease~~increase in purchases of property and equipment of $90.56 million, ~~largely~~offset ~~related~~by to$0.3 amillion ~~decrease~~ in ~~purchases~~proceeds ~~for~~on ~~furnishings~~the ~~and~~disposition ~~fixtures~~of ~~for~~property ~~our~~and ~~Live Units~~equipment.

Financing Activities

Net cash ~~provided~~used byin financing activities ~~increased~~represented ~~for~~a ~~the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to~~ debt ~~financing~~payment ~~proceeds from the issuance~~ of ~~an aggregate of~~ $~~20.~~0.3 million offor ~~Delayed Draw Notes, together with~~ the ~~Warrants,~~three asmonths ~~described~~ended ~~in Note 6~~March 31, ~~Debt,~~2025 inand ~~the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, as well as $14~~2024.~~7 million of proceeds from the preferred stock issuance.~~

Off-Balance Sheet Arrangements

As of ~~September~~March 3031, ~~2024~~2025, we had the following off-balance sheet arrangements:

Letters of Credit

As of ~~September~~March 3031, ~~2024~~2025, we had $4740.56 million of irrevocable standby letters of credit outstanding, which were collateralized by our restricted cash, of which $3225.57 million was under our revolving credit facilities. Letters of credit are primarily used as a form of security deposits for the buildings and partial buildings we lease.

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Surety Bonds

A portion of our leases are supported by surety bonds provided by affiliates of certain insurance companies. As of ~~September~~March 3031, ~~2024~~2025, we had assembled commitments from six surety providers in the amount of $3938.23 million, of which $1614.6 million was outstanding and was an off-balance sheet arrangement. The availability, terms and conditions, and pricing of bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity, our corporate credit rating, and the general perception of our financial performance.

Indemnification Agreements

See Note 12, Commitments and Contingencies, in the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding our indemnification agreements.

Effect of Exchange Rates

Our changes in cash can be impacted by the effect of fluctuating exchange rates. Foreign exchange ~~had a negative~~ effect on cash for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 ofwas ~~$0.3~~not ~~million~~significant. ~~Foreign exchange had a positive effect on cash for nine months ended September 30, 2023 of $0.3 million.~~

Critical Accounting Estimates

There have been no material changes to our critical accounting policies and estimates from the information provided in Part II, Item 7, Critical Accounting Estimates, in the Annual Report~~, other than the following:~~.

The Company has identified a critical accounting estimate associated with the fair market value of the Securities Purchase Agreements. As part of the Securities Purchase Agreements, the Company identified three freestanding financial instruments issued in connection with the transaction: a) Mezzanine equity-classified Series A Convertible Preferred Stock, b) Liability-classified forward contract for commitments of investors to purchase, and commitments of the Company to sell, additional Series A Convertible Preferred Stock and c) Liability-classified preferred stock participation rights. The Company recognized a loss on the preferred stock transaction based on the fair market value of a) the equity-classified preferred stock, b) the liability-classified forward contract and c) the liability-classified participation rights as of the transaction date. The liability-classified forward contract and participation rights are remeasured each reporting period reflecting fluctuations in the underlying variables and assumptions.

Recent Accounting Standards

See Note 2, Recently Issued Accounting Standards, in the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of recently adopted accounting standards and recently issued accounting standards not yet adopted.

Emerging Growth Company Status

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.

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We are an emerging growth company as defined in Section 2(a) of the Securities Act and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. We will remain an emerging growth company until the earliest of: (i) the last day of the fiscal year in which the market value of common stock that is held by non-affiliates exceeds $700.0 million as of the end of that year’s second fiscal quarter; (ii) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more during such fiscal year (as indexed for inflation); (iii) the date on which we have issued more than $1 billion in non-convertible debt in the prior three-year period; or (iv) December 31, 2026, and we expect to continue to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in our market risk from the information provided in Part II, Item 7, Quantitative and Qualitative Disclosures About Market Risk, in the Annual Report.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective due to the existence of the material weaknesses described below to provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.

Material Weaknesses in Internal Control Over Financial Reporting

AsIn ~~disclosed~~designing inand ~~Part~~evaluating ~~II,~~our ~~Item~~internal 9Acontrols ofover ~~the~~financial ~~Annual Report~~reporting, management ~~concluded~~recognizes that internal controls over financial reporting, no matter how well designed and operated, can provide only reasonable assurance of achieving the ~~following~~desired ~~material~~control ~~weaknesses~~objectives. inIn addition, the design of internal ~~control~~controls ~~existed~~over ~~for~~financial reporting must reflect the ~~Company.~~fact ~~Management~~that ~~concluded~~there are resource constraints, and that ~~these~~management ~~material~~is ~~weaknesses~~required ~~still~~to ~~exist~~apply asits judgment in evaluating the benefits of ~~September 30,~~possible ~~2024.~~internal controls over financial reporting relative to their costs.

A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

Notwithstanding the identified material weaknesses, management, including our principal executive officer and principal financial officer, believes the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly represent in all material respects our results of operations, financial condition, and cash flows at and for the periods presented in accordance with U.S. GAAP.

The following are management’s identified material weaknesses in internal controls over financial reporting.

As disclosed in Part II, Item 9A of the Annual Report, management concluded that the following material weaknesses in internal control existed for the Company. Management concluded that these material weaknesses still exist as of March 31, 2025.

Leases

We previously identified a material weakness in our internal control over financial reporting related to the control deficiencies in the process to capture and record lease agreements timely and accurately. Management has concluded that this material weakness in internal control over financial reporting is due to the fact that the Company did not have the adequate resources with the appropriate level of experience and technical expertise to oversee the Company’s leasing business processes and related internal controls.

Control Activities and Control Environment

Given the aggregation of the lease material weakness noted above and other control deficiencies, we have identified related material weaknesses based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), including: (i) deficiencies in the principles associated with the control activities component of the COSO framework relating to establishment of formal policies and procedures and consistent application thereof, and (ii) deficiencies in the principles associated with the control environment component of the COSO framework relating to hiring and training sufficient personnel to timely support the Company’s internal control objectives to ascertain whether the components of internal control are present and functioning.

Asset Impairment

52We previously identified a material weakness regarding the lack of design and effective controls to identify and consider relevant impairment indicators, determination of asset valuation, and possible impairment of assets, including right-of-use assets.

Preferred Stock

We previously identified a material weakness regarding management’s review of the preferred stock transactions entered into by the Company. Management’s review of the control was determined to not be at a level of precision sufficient enough to identify key metrics which impacted the valuation and accounting treatment under GAAP of the preferred stock.

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~~Management~~Control ~~identified a material weakness regarding the lack of design and effective controls to identify and consider relevant impairment indicators~~Activities, ~~determination~~Control ofEnvironment ~~asset valuation,~~ and ~~possible~~Information ~~impairment~~& ~~of assets, including right-of-use assets.~~ Communication

~~Remediation~~Given ~~Plan~~the aggregation of the material weaknesses noted above and other control deficiencies, we have identified related COSO material weaknesses, including deficiencies in the principles associated with the (i) control activities component of the COSO framework relating to the establishment of formal policies and procedures and consistent application thereof, (ii) control environment component of the COSO framework relating to hiring and training sufficient personnel to timely support the Company’s internal controls objectives to ascertain whether the components of internal controls are present and functioning, and (iii) information and communication component of the COSO framework relating to the insufficient communication of relevant financial information between key functions within the Company resulting in certain transactions and events not being communicated in a timely manner to those responsible for preparing and reviewing our financial statements.

Remediation Plans

To remediate these material weaknesses, we identified improvements, including specific remediation plans for leases, control activities and control environment, and asset impairments, as described in Item 9A. Controls and Procedures of the Annual Report, which we are continuing to implement.

Leases

Throughout 2024, we onboarded new team members with a greater level of experience and technical expertise to oversee key areas of our finance function, such as accounting, which includes the Company’s leasing business processes and related internal controls. We also implemented improvements related to our lease process to capture and record lease agreements timely and accurately and we provided additional training to personnel responsible for the relevant controls. However, our enhancements did not operate for a sufficient period of time in 2024 to allow a reasonable period of evaluation for remediation of this material weakness to be considered complete.

To remediate our lease material weaknesses, we will continue to focus on hiring talent with an appropriate level of experience and technical expertise to oversee key areas of our finance function, which includes the performance of controls over the Company’s accounting for leases. We will also continue to implement control design changes related to our lease process to capture and record lease agreements timely and accurately, and provided additional training to personnel responsible for the relevant controls. Further, we will continue to invest in appropriate resources with the level of experience and technical expertise necessary to design and operate effectively internal controls over our accounting for leases.

Control Activities, Control Environment and Information & Communication

We implemented improvements related to our establishment of formal policies and procedures in addition to onboarding more personnel to support our internal control objectives. However, our enhancements did not operate for a sufficient period of time to allow a reasonable period of evaluation for remediation of this material weakness to be considered complete.

To remediate our control activities and control environment material weaknesses, we continue to implement improvements related to our establishment of formal policies and procedures in addition to hiring more personnel to support our internal control objectives. We will also continue developing and maintaining policies and procedures. Additionally, we are committed to hiring sufficient personnel which are appropriate in both qualifications and experience for their relevant roles and improving collaboration between key functions within the Company to ensure timely and accurate reporting of financial matters. We have made notable progress in this area and will continue to evaluate our organization for areas of opportunity and further enhancement.

Asset Impairment

To remediate our asset impairment material weakness, we continue to implement control improvements for assessing and valuing asset impairments, particularly as they apply to our ROU lease assets and related items, including but not limited to the use of qualified, external subject matter professionals during our asset impairment process. We will continue to execute and evaluate operating effectiveness of adequate internal control over our asset impairment evaluation and valuation process.

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Preferred Stock

To remediate our preferred stock material weakness, we continue to implement control improvements by engaging resources at the Company with experience in performing control activities over complex and/or non-routine transactions, as well as utilizing third-party consultants and specialists. We will continue to execute and evaluate operating effectiveness of adequate internal control over our preferred stock evaluation and valuation process.

As changes to the design and performance of controls are implemented, we will need a sufficient period of time to evaluate the operating effectiveness of such controls.

Changes in Internal Control over Financial Reporting

~~During~~Other ~~November~~than ~~2024, Dominique Bourgault resigned from his position~~ as ~~our~~discussed ~~Chief Financial Officer and Adam Bowen resigned from his position as our Chief Accounting Officer. As a result of these resignations~~above, weduring ~~modified certain existing internal controls and procedures. Other than in connection with changes in personnel and executing upon~~ the ~~implementation~~period ~~of the remediation measures~~ covered by this ~~Quarterly Report on Form 10-Q and the associated changes to our internal control over financial reporting~~report, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The information regarding legal proceedings in Note 12 “Commitments and Contingencies” to our condensed consolidated financial statements included in Part I Item 1. “Financial Statements.” of this Quarterly Report on Form 10-Q is hereby incorporated by reference into this Part II Item 1. “Legal Proceedings.”

Item 1A. Risk Factors

~~There~~We have ~~been~~not noidentified any material changes to the risk factors ~~from~~previously ~~those~~disclosed wein ~~previously~~Part ~~provided~~I - Item 1A - “Risk Factors” in ~~the~~our Annual Report., which is incorporated by reference into this Quarterly Report on Form 10-Q, other than as set forth below:

Our delayed SEC filings have made us currently ineligible to use certain registration statements to register the offer and sale of securities, which could have adverse effects including on our ability to raise capital or employee retention and recruitment.

Because we were unable to timely file this Quarterly Report on Form 10-Q, the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025 (the “Q2 2025 Form 10-Q”), and certain other previous periodic reports with the SEC, we are not eligible to register the offer and sale of our securities using a registration statement on Form S-3 until we have timely filed all periodic reports required under the Exchange Act for one year. Should we wish to register the offer and sale of our securities to the public prior to the time we are eligible to use Form S-3, including for purposes of raising capital or permitting the resale of privately placed securities, we will be required to file a registration statement on Form S-1 and have it reviewed and declared effective by the SEC. Doing so would likely take longer than filing a registration statement on Form S-3 and increase our transaction costs, making it more difficult to execute any such transaction successfully and potentially harming our liquidity and financial condition. We have also been unable to have our resale registration statement on Form S-1 declared effective due to our delayed SEC filings. We will also need to file a post-effective amendment on Form S-1 to convert our previous Form S-3 registration statement with respect to resales of securities into a Form S-1, which may be reviewed and will need to be declared effective by the SEC. We cannot predict when we will regain eligibility to use Form S-3 or have an effective Form S-1, due in part to the uncertainties associated with our previously announced financial restatement process and the possibility of additional delays in our SEC filings.

Furthermore, our failure to timely file our periodic reports with the SEC resulted in the suspension of the availability of Form S-8 for issuances of shares pursuant to our equity incentive plans for employees and directors. For that reason, employees and directors have not been permitted to exercise outstanding stock options or receive unrestricted shares of our common stock pursuant to restricted stock units or other equity awards, and we will remain unable to grant other equity awards under our Form S-8 registration statements, until such time that we are deemed to have filed all reports and other materials required to be filed under the Exchange Act, including the Q2 2025 Form 10-Q. The suspension of our ability to utilize Form S-8 has adversely impacted employee morale, incentives, and recruitment, and if we fail to file future required reports, our ability to use Form S-8 for the above purposes will remain or again be suspended, which could adversely affect our business.

We have previously and may again require additional capital to support business growth or respond to business challenges, and this capital might not be available in a timely manner or on favorable terms.

We intend to continue investing in our business growth and may require additional funds to respond to business challenges, as we have in the past, including the need to develop or add new properties or services or enhance our existing properties or services, enhance our operating infrastructure, invest in the effort to integrate our properties with Marriott’s systems under the Marriott Agreement, add personnel, and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds in the future, similar to recent financings that we’ve completed. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. Any debt financing could involve restrictive covenants relating to financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions or strategic partnerships. Our outstanding shares of Series A Preferred Stock may also make it more difficult for us to raise capital in the future due to certain rights provided to the holders Series A Preferred Stock, including such holders’ senior rights relative to rights of the holders of our common

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stock and such holders’ right to collectively purchase on a pro-rata basis up to 25% of any equity offering until August 13, 2029 at a purchase price equal to 75% of the purchase price of any other investor in such offering, each as described in this Quarterly Report on Form 10-Q. Additionally, the 2025 Purchase Agreement grants a certain Covered Investor, which is a holder of the Preferred Stock, the right to purchase up to 100% of any equity offering or certain debt financings until July 4, 2026. If we are unable to obtain adequate or satisfactory financing when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly limited.

Our indebtedness and credit facilities contain financial covenants and other restrictions on our actions that may limit our financial and operational flexibility or otherwise adversely affect our results of operations.

The terms of certain of our indebtedness and credit facilities include a number of covenants that limit our ability and our subsidiaries’ ability to, among other things, incur additional indebtedness, grant liens, merge or consolidate with other companies, sell or otherwise dispose of our assets, pay dividends, make redemptions and repurchases of stock, make investments, loans and acquisitions, change the nature of our business or engage in transactions with affiliates. In addition, we must maintain our common stock’s listing on Nasdaq, and beginning in 2027, comply with a minimum free cash flow covenant and a minimum liquidity covenant. We may seek additional credit arrangements, in part to support letters of credit or other security instruments for our leases of guest properties. Any future credit arrangements may have stricter covenants or other more onerous terms than our current arrangements. The terms of our indebtedness and credit facilities may restrict our current and future operations and could adversely affect our ability to finance our future operations or capital needs. In addition, complying with these covenants may make it more difficult for us to successfully execute our business strategy, including potential acquisitions, and to compete against companies that are not subject to such restrictions. Any failure to comply with the covenants or payment requirements specified in our credit agreements has resulted and could again result in an event of default under the agreements, which, if not cured or waived, would give the lenders the right to terminate their commitments to provide additional loans, declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable, increase the interest rates applicable to such debt, and exercise rights and remedies, including by way of initiating foreclosure proceedings against any assets constituting collateral for the obligations under the credit facilities. If our debt were to be accelerated, we may not have sufficient cash or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which could immediately adversely affect our business, results of operations, financial condition, and cash flows. Even if we were able to obtain new financing, such financing may not be on commercially reasonable terms or on terms that are acceptable to us.

Our outstanding shares of Preferred Stock and the holders thereof have certain special rights. Such rights, as well as similar or other rights that may accompany any future issuance of shares of preferred stock, may adversely affect the voting power or value of our common stock.

Our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, powers, preferences, limitations and relative rights, including preferences over our common stock respecting dividends and distributions, as our Board may determine. The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock.

For example, as of July 7, 2025, we had 60,113,000 shares of Preferred Stock outstanding. The Preferred Stock ranks senior to our common stock. The Preferred Stock has, and any future senior securities we may issue may have, priority upon liquidation. The shares of Preferred Stock are convertible into shares of common stock, have no stated maturity, and will remain outstanding indefinitely unless converted into common stock. The Preferred Stock will be convertible at the holders’ option into common stock at an initial conversion price of the lower of (i) $1.00 and (ii) a ten percent (10%) discount to the lowest daily VWAP of the common stock on the principal trading market therefor in the seven trading days prior to the date of delivery of an Optional Conversion Notice (as defined in the Certificate of Designation (as defined below)); provided that the conversion price will not be less than $0.50, as adjusted for any stock dividends, splits, combinations or other similar events on the common stock or Preferred Stock.

In addition, holders of the Preferred Stock are also entitled to receive, when, as and if declared by the Board, cumulative dividends in cash (subject to certain conditions), at a rate of (a) fifteen percent (15.00%) through August 13, 2025, (b) ten percent (10.00%) from August 14, 2025 through August 13, 2027, and (c) five percent (5.00%) from August 14, 2027 through August 13, 2028 on the sum of (i) the liquidation preference per share of Preferred Stock and (ii) all accumulated and unpaid dividends (if any), payable quarterly, in arrears. Dividends accumulate on a daily basis from the most recent date as to which dividends have been paid, or, if no dividends have been paid, from the date of issuance of such shares of

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Preferred Stock (whether or not (i) any of the Company’s agreements prohibit the current payment of dividends, (ii) there shall be earnings or funds of the Company legally available for the payment of such dividends, or (iii) the Company declares the payment of dividends), until the earlier of: (x) the date that the Company publicly reports that it has realized at least $87 million of free cash flow (representing cash used in operating activities plus cash used in investing activities) over a twelve month period; or (y) August 13, 2028.

The purchasers of the shares of our Preferred Stock also have certain contractual rights. For example, we are obliged to file a registration statement under the Securities Act within 30 calendar days of the filing of this Annual Report with respect to the resale of shares of common stock receivable upon conversion of the Preferred Stock. The securities purchase agreements under which the shares of Preferred Stock were purchased give the purchasers thereunder the right to purchase up to 25% of any equity offering within the next five years. Additionally, the 2025 Purchase Agreement grants a certain Covered Investor, which is a holder of the Preferred Stock, the right to purchase up to 100% of any equity offering or certain debt financings until July 4, 2026.

The rights of the Preferred Stock, as well as the rights we may provide in issuing shares of preferred stock in the future, may adversely affect the voting power or value of our common stock.

We have issued, and may in the future issue, shares of common stock or other equity securities, which may depress the price of our common stock and other publicly traded securities.

We have the following securities outstanding:

•60,113,000 shares of Preferred Stock, which are currently convertible into shares of common stock at a conversion price of $1.00 per share, subject to certain limitations and adjustments, and after giving effect to all potential in-kind dividend payments and assuming the lowest conversion price, may be convertible into up to 24,872,000 shares of common stock;

•the Public Warrants, which are exercisable for an aggregate of 724,997 shares of common stock at an exercise price of $230.00 per share; and

•other Warrants to purchase an aggregate of 5,521,281 shares of common stock at a weighted average exercise price of $1.24 per share.

•Other Warrants to purchase an aggregate of 21,196,402 shares of common stock at an exercise price of $1.50 per share.

The exercise or conversion of such securities will dilute the ownership interests of our other stockholders, and this dilution could be material. Any sales in the public market of our common stock issuable upon such exercises or conversions could adversely affect prevailing market prices of our common stock and Public Warrants. In addition, the existence of such exercisable or convertible securities may encourage short selling by stock market participants, because the common stock issuable upon exercise or conversion of such securities could be used to satisfy short positions, or anticipated exercises or conversions of such securities into shares of our common stock could depress the price of our common stock.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the quarter ended ~~September~~March 3031, ~~2024~~2025, none of the Company’s directors or Section 16 officers adopted or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits

The following exhibits are filed as part of this report or hereby incorporated by references to filings previously made with the SEC.

		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed or Furnished Herewith
3.1	Amended and Restated Certificate of Incorporation of Sonder Holdings Inc.	8-K	001-39907	3.1	January 24, 2022
			001-39907	3.1
3.2	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Sonder Holdings, Inc.	8-K	001-39907	3.1	September 19, 2023
			001-39907	3.1
3.3	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Sonder Holdings, Inc.	8-K	001-39907	3.1	October 1, 2024
			001-39907	4.1
3.4	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Sonder Holdings Inc. filed with the Secretary of State of the State of Delaware on December 23, 2024	8-K	001-39907	3.1	December 30, 2024
3.5	Certificate of Designation of Powers, Preferences and Rights of Series A Convertible Preferred Stock of Sonder Holdings Inc.	8-K	001-39907	3.1	August 19, 2024
3.6	Amended and Restated Bylaws of Sonder Holdings Inc.	8-K	001-39907	3.1	~~December~~November 130, 2022
4.1	Specimen Stock Certificate of the Company	8-K	001-39907	4.1	January 24, 2022
4.2	Specimen Warrant Certificate of the Company	S-1	333-251663	4.3	December 23, 2020
4.3	Warrant Agreement, dated as of January 22, 2021, by and among Gores Metropoulos II, Inc., Computershare Inc., and Computershare Trust Company, N.A., as warrant agent	8-K	001-39907	4.1	January 25, 2021
4.4	Form of Warrant Agreement by and among Sonder Holdings Inc., Computershare Inc., and Computershare Trust Company, N.A., dated January 19, 2022	S-1	333-262438	4.3	January 31, 2022
10.1	Offer Letter between Sonder USA Inc. and Michael Hughes dated January 14, 2025	10-K	001-39907	10.25	July 24, 2025
4.5	Form of Warrant Agreement by and among the Company, Computershare Inc. and Computershare Trust Company, N.A., as warrant agent	8-K	001-39907	4.1	December 30, 2024
10.1	Form of Securities Purchase Agreement	8-K	001-39907	10.3	August 19, 2024
31.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					X
10.2*	Form of Limited Waiver and Consent Agreement by and among the Company and the Preferred Stockholders party thereto	8-K	001-39907	10.1	October 29, 2024
32.1*	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					X
10.3	Limited Waiver and Consent Agreement, dated as of October 28, 2024, by and among the Company, the Note Obligors, the Guarantors, the Investors party hereto and the Agent	8-K	001-39907	10.2	October 29, 2024
101.INS	Inline XBRL Instance Document					X
10.4	Waiver Agreement, dated as of October 28, 2024, by and among the Borrowers and SVB	8-K	001-39907	10.3	October 29, 2024
101.SCH	Inline XBRL Taxonomy Extension Schema Document					X
10.5#	2021 Equity Incentive Plan	S-4/A	333-262438	10.8	December 13, 2021
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document					X
10.6#	First Amendment to Sonder Holdings Inc. 2021 Equity Incentive Plan, effective December 23, 2024	8-K	001-39907	10.1	December 30, 2024
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document					X

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Table of Contents

31.1

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

* ~~The~~This ~~schedules~~certification tois ~~this~~deemed ~~agreement~~not ~~have~~filed ~~been~~for ~~omitted~~purposes ~~pursuant~~of tosection ~~Item~~18 ~~601~~of the Securities Exchange Act of 1934, as amended (athe “Exchange Act”)~~(5)~~, ofor ~~Regulation~~otherwise ~~S-K.~~subject Ato ~~copy~~the liability of ~~any~~that ~~omitted~~section, ~~schedule~~nor ~~will~~shall it be ~~furnished~~deemed toincorporated by reference into any filing under the Securities ~~and~~Act ~~Exchange~~of ~~Commission~~1933, ~~upon~~as ~~request.~~amended, or the Exchange Act.

** This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.60

# Indicates management contract of compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						Sonder Holdings Inc.
						(registrant)
February 12, 2025						/s/ Rahul Thumati
August 25, 2025						/s/ Rahul Thumati
Date						Rahul Thumati
						Interim Chief Accounting Officer
						(Principal Accounting Officer)

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Filing Compare · Sonder Holdings Inc.