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Sonos Reports Second Quarter Fiscal 2024 Results

Company reports solid first half, on-track to achieve Fiscal 2024 guidance

Sonos, Inc. (Nasdaq: SONO) today reported second quarter fiscal 2024 results.

“Thanks to the hard work of our team, and the strength of our brand and product portfolio, we delivered results that slightly exceeded our expectations in our second quarter despite the challenging environment,” Sonos CEO Patrick Spence commented. “Today marks the launch of our completely reimagined Sonos app, which is our most extensive app redesign ever. This is a major step in enabling our multi-year product cycle and sets us up well for the launch of our highly anticipated new product later this quarter.”

“Our Q2 results show our commitment to execution. With a solid first half behind us, we are well positioned to deliver on our Fiscal 2024 guidance,” said Sonos CFO Saori Casey.

Second Quarter Fiscal 2024 Financial Highlights (unaudited)

  • Revenue of $252.7 million
  • Gross margin of 44.3%
  • GAAP net loss of ($69.7) million, GAAP diluted loss per share (EPS) of ($0.56)
  • Non-GAAP net loss1 of ($42.1) million, Non-GAAP diluted EPS1 of ($0.34)
  • Adjusted EBITDA1 of ($33.6) million

Notes:

(1) Non-GAAP net loss/Non-GAAP diluted loss per share (EPS) and Adjusted EBITDA exclude stock-based compensation, legal and transaction related fees, amortization of intangibles, and restructuring and abandonment costs. See “Use of Non-GAAP Measures” and reconciliations to GAAP measures below.

Maintaining our Fiscal 2024 Outlook

 

Low end

Midpoint

High end

Revenue ($ million)

1,600

1,650

1,700

% y/y

-3%

0%

3%

% y/y - constant currency

-3%

0%

3%

 

 

 

 

Gross margin - GAAP

45.0%

45.5%

46.0%

Adjustments(1)

0.4%

0.4%

0.4%

Gross margin - Non-GAAP(1)

45.4%

45.9%

46.4%

 

 

 

 

Adjusted EBITDA ($ million)

150

165

180

Adjusted EBITDA margin

9.4%

10.0%

10.6%

Notes:

(1) Non-GAAP gross margin excludes approximately $7 million (0.4% of revenue) of stock-based compensation and amortization of intangible assets included in GAAP gross margin

Supplemental Earnings Presentation

The company has posted a supplemental earnings presentation accompanying its second quarter fiscal 2024 results to the Earnings Reports section of its investor relations website at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports.

Conference Call, Webcast and Transcript

The company will host a webcast of its conference call and Q&A related to its second quarter fiscal 2024 results on May 7, 2024, at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time). Participants may access the live webcast in listen-only mode on the Sonos investor relations website at https://investors.sonos.com/news-and-events/default.aspx.

The conference call may also be accessed by dialing (888) 330-2454 with conference ID 8641747. Participants outside the U.S. can access the call by dialing (240) 789-2714 using the same conference ID.

An archived webcast of the conference call and a transcript of the company’s prepared remarks and Q&A session will also be available at https://investors.sonos.com/reports-and-filings/default.aspx#section=earningsreports following the call.

Consolidated Statements of Operations and Comprehensive (Loss) Income

 

 

(unaudited, in thousands, except share and per share amounts)

 

 

 

 

 

 

 

 

Three Months Ended

Six Months Ended

 

March 30,

2024

April 1,

2023

March 30,

2024

April 1,

2023

Revenue

$

252,662

 

$

304,173

 

$

865,531

 

$

976,752

 

Cost of revenue

 

140,624

 

 

172,555

 

 

470,815

 

 

560,078

 

Gross profit

 

112,038

 

 

131,618

 

 

394,716

 

 

416,674

 

Operating expenses

 

 

 

 

Research and development

 

80,322

 

 

80,785

 

 

159,557

 

 

157,726

 

Sales and marketing

 

61,835

 

 

63,621

 

 

145,785

 

 

142,317

 

General and administrative

 

40,841

 

 

44,438

 

 

80,639

 

 

87,553

 

Total operating expenses

 

182,998

 

 

188,844

 

 

385,981

 

 

387,596

 

Operating (loss) income

 

(70,960

)

 

(57,226

)

 

8,735

 

 

29,078

 

Other income, net

 

 

 

 

Interest income

 

3,933

 

 

3,181

 

 

7,008

 

 

5,149

 

Interest expense

 

(122

)

 

(152

)

 

(227

)

 

(311

)

Other (loss) income, net

 

(3,303

)

 

(2,832

)

 

6,971

 

 

20,745

 

Total other income, net

 

508

 

 

197

 

 

13,752

 

 

25,583

 

(Loss) income before (benefit from) provision for income taxes

 

(70,452

)

 

(57,029

)

 

22,487

 

 

54,661

 

(Benefit from) provision for income taxes

 

(743

)

 

(26,377

)

 

11,249

 

 

10,124

 

Net (loss) income

$

(69,709

)

$

(30,652

)

$

11,238

 

$

44,537

 

 

 

 

 

 

Net (loss) income attributable to common stockholders:

 

 

 

 

Basic and diluted

$

(69,709

)

$

(30,652

)

$

11,238

 

$

44,537

 

 

 

 

 

 

Net (loss) income per share attributable to common stockholders:

 

 

 

 

Basic

$

(0.56

)

$

(0.24

)

$

0.09

 

$

0.35

 

Diluted

$

(0.56

)

$

(0.24

)

$

0.09

 

$

0.34

 

 

 

 

 

 

Weighted-average shares used in computing net (loss) income per share attributable to common stockholders:

 

 

 

 

Basic

 

123,749,605

 

 

127,952,875

 

 

124,465,661

 

 

127,582,560

 

Diluted

 

123,749,605

 

 

127,952,875

 

 

128,206,823

 

 

132,834,096

 

 

 

 

 

 

Total comprehensive (loss) income

 

 

 

 

Net (loss) income

 

(69,709

)

 

(30,652

)

 

11,238

 

 

44,537

 

Change in foreign currency translation adjustment

 

(85

)

 

4,542

 

 

(948

)

 

(2,684

)

Net unrealized loss on marketable securities

 

(26

)

 

 

 

(26

)

 

 

Comprehensive (loss) income

$

(69,820

)

$

(26,110

)

$

10,264

 

$

41,853

 

Consolidated Balance Sheets

(unaudited, in thousands, except par values)

 

 

As of

 

 

March 30,

2024

 

September 30,

2023

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

245,962

 

 

$

220,231

 

Marketable securities

 

 

45,598

 

 

 

-

 

Accounts receivable, net

 

 

69,725

 

 

 

67,583

 

Inventories

 

 

179,545

 

 

 

346,521

 

Prepaids and other current assets

 

 

42,077

 

 

 

25,296

 

Total current assets

 

 

582,907

 

 

 

659,631

 

Property and equipment, net

 

 

88,236

 

 

 

87,075

 

Operating lease right-of-use assets

 

 

51,594

 

 

 

48,918

 

Goodwill

 

 

81,303

 

 

 

80,420

 

Intangible assets, net

 

 

 

 

In-process research and development

 

 

71,235

 

 

 

69,791

 

Other intangible assets

 

 

17,243

 

 

 

20,218

 

Deferred tax assets

 

 

1,638

 

 

 

1,659

 

Other noncurrent assets

 

 

31,459

 

 

 

34,529

 

Total assets

 

$

925,615

 

 

$

1,002,241

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

121,497

 

 

$

187,981

 

Accrued expenses

 

 

72,241

 

 

 

89,717

 

Accrued compensation

 

 

38,470

 

 

 

22,079

 

Deferred revenue, current

 

 

20,692

 

 

 

20,188

 

Other current liabilities

 

 

50,317

 

 

 

34,253

 

Total current liabilities

 

 

303,217

 

 

 

354,218

 

Operating lease liabilities, noncurrent

 

 

51,984

 

 

 

54,956

 

Deferred revenue, noncurrent

 

 

62,616

 

 

 

60,650

 

Deferred tax liabilities

 

 

9,972

 

 

 

9,846

 

Other noncurrent liabilities

 

 

3,822

 

 

 

3,914

 

Total liabilities

 

 

431,611

 

 

 

483,584

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

Stockholders’ equity:

 

 

 

 

Common stock, $0.001 par value

 

 

128

 

 

 

130

 

Treasury stock

 

 

(77,996

)

 

 

(72,586

)

Additional paid-in capital

 

 

577,840

 

 

 

607,345

 

Accumulated deficit

 

 

(1,550

)

 

 

(12,788

)

Accumulated other comprehensive loss

 

 

(4,418

)

 

 

(3,444

)

Total stockholders’ equity

 

 

494,004

 

 

 

518,657

 

Total liabilities and stockholders’ equity

 

$

925,615

 

 

$

1,002,241

 

Consolidated Statements of Cash Flows

(unaudited, dollars in thousands)

 

 

Six Months Ended

 

 

March 30,

2024

 

April 1,

2023

Cash flows from operating activities

 

 

 

 

Net income

 

$

11,238

 

 

$

44,537

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

23,121

 

 

 

22,845

 

Restructuring and abandonment charges

 

 

266

 

 

 

4,846

 

Stock-based compensation expense

 

 

43,031

 

 

 

41,220

 

Provision for inventory obsolescence

 

 

5,293

 

 

 

10,059

 

Other

 

 

2,188

 

 

 

3,173

 

Deferred income taxes

 

 

(31

)

 

 

1,358

 

Foreign currency transaction gains

 

 

(3,441

)

 

 

(14,126

)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(2,793

)

 

 

16,932

 

Inventories

 

 

161,683

 

 

 

118,032

 

Other assets

 

 

(15,169

)

 

 

5,481

 

Accounts payable and accrued expenses

 

 

(89,151

)

 

 

(186,194

)

Accrued compensation

 

 

16,040

 

 

 

6,108

 

Deferred revenue

 

 

1,857

 

 

 

(4,484

)

Other liabilities

 

 

10,025

 

 

 

(463

)

Net cash provided by operating activities

 

 

164,157

 

 

 

69,324

 

Cash flows from investing activities

 

 

 

 

Purchases of marketable securities

 

 

(45,280

)

 

 

 

Purchases of property and equipment

 

 

(16,263

)

 

 

(23,403

)

Net cash used in investing activities

 

 

(61,543

)

 

 

(23,403

)

Cash flows from financing activities

 

 

 

 

Payments for repurchase of common stock

 

 

(76,250

)

 

 

(30,054

)

Proceeds from exercise of stock options

 

 

11,905

 

 

 

17,584

 

Payments for repurchase of common stock related to shares withheld for tax in connection with vesting of restricted stock units

 

 

(13,242

)

 

 

(18,199

)

Net cash used in financing activities

 

 

(77,587

)

 

 

(30,669

)

Effect of exchange rate changes on cash and cash equivalents

 

 

704

 

 

 

4,766

 

Net increase in cash and cash equivalents

 

 

25,731

 

 

 

20,018

 

Cash and cash equivalents

 

 

 

 

Beginning of period

 

 

220,231

 

 

 

274,855

 

End of period

 

$

245,962

 

 

$

294,873

 

Supplemental disclosure

 

 

 

 

Cash paid for interest

 

$

134

 

 

$

330

 

Cash paid for taxes, net of refunds

 

$

12,247

 

 

$

6,399

 

Cash paid for amounts included in the measurement of lease liabilities

 

$

6,670

 

 

$

7,219

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

Purchases of property and equipment in accounts payable and accrued expenses

 

$

7,582

 

 

$

8,393

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

7,637

 

 

$

711

 

Reconciliation of GAAP to Non-GAAP Cost of Revenue and Gross Profit

 

 

 

 

(unaudited, in thousands, except percentages)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 30,

2024

 

April 1,

2023

 

March 30,

2024

 

April 1,

2023

Reconciliation of GAAP cost of revenue

 

 

 

 

 

 

 

 

GAAP cost of revenue

 

$

140,624

 

 

$

172,555

 

 

$

470,815

 

 

$

560,078

 

Stock-based compensation expense

 

 

686

 

 

 

581

 

 

 

1,340

 

 

 

1,151

 

Amortization of intangibles

 

 

973

 

 

 

973

 

 

 

1,945

 

 

 

2,158

 

Non-GAAP cost of revenue

 

$

138,965

 

 

$

171,001

 

 

$

467,530

 

 

$

556,769

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP gross profit

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

112,038

 

 

$

131,618

 

 

$

394,716

 

 

$

416,674

 

Stock-based compensation expense

 

 

686

 

 

 

581

 

 

 

1,340

 

 

 

1,151

 

Amortization of intangibles

 

 

973

 

 

 

973

 

 

 

1,945

 

 

 

2,158

 

Non-GAAP gross profit

 

$

113,697

 

 

$

133,172

 

 

$

398,001

 

 

$

419,983

 

 

 

 

 

 

 

 

 

 

GAAP gross margin

 

 

44.3

%

 

 

43.3

%

 

 

45.6

%

 

 

42.7

%

Non-GAAP gross margin

 

 

45.0

%

 

 

43.8

%

 

 

46.0

%

 

 

43.0

%

Reconciliation of Selected Non-GAAP Financial Measures

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 30,

2024

 

April 1,

2023

 

March 30,

2024

 

April 1,

2023

Research and Development (GAAP)

 

$

80,322

 

 

$

80,785

 

 

$

159,557

 

 

$

157,726

 

Stock-based compensation

 

 

10,419

 

 

 

9,565

 

 

 

19,398

 

 

18,716

Amortization of intangibles

 

 

496

 

 

 

495

 

 

 

992

 

 

 

990

 

Restructuring and abandonment costs

 

 

-

 

 

 

2,682

 

 

 

323

 

 

 

2,682

 

Research and Development (Non-GAAP)

 

$

69,407

 

 

$

68,043

 

 

$

138,844

 

 

$

135,338

 

 

 

 

 

 

 

 

 

 

Sales and Marketing (GAAP)

 

$

61,835

 

 

$

63,621

 

 

$

145,785

 

 

$

142,317

 

Stock-based compensation

 

 

4,972

 

 

 

4,475

 

 

 

8,787

 

 

 

8,588

 

Amortization of intangibles

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Restructuring and abandonment costs

 

 

-

 

 

 

1,034

 

 

 

113

 

 

 

1,034

 

Sales and Marketing (Non-GAAP)

 

$

56,863

 

 

$

58,112

 

 

$

136,885

 

 

$

132,695

 

 

 

 

 

 

 

 

 

 

General and Administrative (GAAP)

 

 

40,841

 

 

 

44,438

 

 

 

80,639

 

 

 

87,553

 

Stock-based compensation

 

 

7,596

 

 

 

6,404

 

 

 

13,506

 

 

 

12,765

 

Legal and transaction related costs

 

 

2,395

 

 

 

9,018

 

 

 

6,140

 

 

 

15,307

 

Amortization of intangibles

 

 

24

 

 

 

24

 

 

 

48

 

 

 

48

 

Restructuring and abandonment costs

 

 

6

 

 

 

1,130

 

 

 

138

 

 

 

1,130

 

Adjusted General and Administrative (Non-GAAP)

 

$

30,820

 

 

$

27,862

 

 

$

60,807

 

 

$

58,303

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses (GAAP)

 

$

182,998

 

 

$

188,844

 

 

$

385,981

 

 

$

387,596

 

Stock-based compensation

 

 

22,987

 

 

 

20,444

 

 

 

41,691

 

 

 

40,069

 

Legal and transaction related costs

 

 

2,395

 

 

 

9,018

 

 

 

6,140

 

 

 

15,307

 

Amortization of intangibles

 

 

520

 

 

 

519

 

 

 

1,040

 

 

 

1,038

 

Restructuring and abandonment costs

 

 

6

 

 

 

4,846

 

 

 

574

 

 

 

4,846

 

Adjusted Operating Expenses (Non-GAAP)

 

$

157,090

 

 

$

154,017

 

 

$

336,536

 

 

$

326,336

 

 

 

 

 

 

 

 

 

 

Total Operating (Loss) Income (GAAP)

 

$

(70,960

)

 

$

(57,226

)

 

$

8,735

 

 

$

29,078

 

Stock-based compensation

 

 

23,673

 

 

 

21,025

 

 

 

43,031

 

 

 

41,220

 

Legal and transaction related costs

 

 

2,395

 

 

 

9,018

 

 

 

6,140

 

 

 

15,307

 

Amortization of intangibles

 

 

1,493

 

 

 

1,492

 

 

 

2,985

 

 

 

3,196

 

Restructuring and abandonment costs

 

 

6

 

 

 

4,846

 

 

 

574

 

 

 

4,846

 

Adjusted Operating (Loss) Income (Non-GAAP)

 

$

(43,393

)

 

$

(20,845

)

 

$

61,465

 

 

$

93,647

 

Depreciation

 

 

9,750

 

 

 

10,221

 

 

 

20,136

 

 

 

19,649

 

Adjusted EBITDA (Non-GAAP)

 

$

(33,643

)

 

$

(10,624

)

 

$

81,601

 

 

$

113,296

 

Reconciliation of Net (Loss) Income to Adjusted EBITDA

 

 

 

 

(unaudited, dollars in thousands except percentages)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 30,

2024

 

April 1,

2023

 

March 30,

2024

 

April 1,

2023

(In thousands, except percentages)

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(69,709

)

 

$

(30,652

)

 

$

11,238

 

 

$

44,537

 

Add (deduct):

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

11,243

 

 

 

11,713

 

 

 

23,121

 

 

 

22,845

 

Stock-based compensation expense

 

 

23,673

 

 

 

21,025

 

 

 

43,031

 

 

 

41,220

 

Interest income

 

 

(3,933

)

 

 

(3,181

)

 

 

(7,008

)

 

 

(5,149

)

Interest expense

 

 

122

 

 

 

152

 

 

 

227

 

 

 

311

 

Other expense (income), net

 

 

3,303

 

 

 

2,832

 

 

 

(6,971

)

 

 

(20,745

)

(Benefit from) provision for income taxes

 

 

(743

)

 

 

(26,377

)

 

 

11,249

 

 

 

10,124

 

Legal and transaction related costs (1)

 

 

2,395

 

 

 

9,018

 

 

 

6,140

 

 

 

15,307

 

Restructuring and abandonment costs (2)

 

 

6

 

 

 

4,846

 

 

 

574

 

 

 

4,846

 

Adjusted EBITDA

 

$

(33,643

)

 

$

(10,624

)

 

$

81,601

 

 

$

113,296

 

Revenue

 

$

252,662

 

 

$

304,173

 

 

$

865,531

 

 

$

976,752

 

Net (loss) income margin

 

 

(27.6

)%

 

 

(10.1

)%

 

 

1.3

%

 

 

4.6

%

Adjusted EBITDA margin

 

 

(13.3

)%

 

 

(3.5

)%

 

 

9.4

%

 

 

11.6

%

(1) Legal and transaction-related costs consist of expenses related to our intellectual property ("IP") litigation against Alphabet and Google, as well as legal and transaction costs associated with our acquisition activity, which we do not consider representative of our underlying operating performance.

(2) Restructuring and abandonment costs for the three and six months ended March 30, 2024 are related to our restructuring plan initiated on June 14, 2023 (the “2023 restructuring plan"). Restructuring and abandonment costs for the three and six months ended April 1, 2023 consist of costs incurred in March 2023 related to abandonment of portions of our office spaces for the remainder of their respective lease terms in support of operational efficiencies. Lease abandonment costs include the impact of the write-off of the associated operating lease right-of-use assets, as well as accelerated depreciation of the related leasehold improvements.

Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net (Loss) Income

 

 

 

 

(unaudited, in thousands, except share and per share amounts)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 30,

2024

 

April 1,

2023

 

March 30,

2024

 

April 1,

2023

Reconciliation of GAAP net (loss) income

 

 

 

 

 

 

 

 

GAAP net (loss) income

 

$

(69,709

)

 

$

(30,652

)

 

$

11,238

 

$

44,537

Stock-based compensation expense

 

 

23,673

 

 

 

21,025

 

 

 

43,031

 

 

 

41,220

 

Legal and transaction related costs

 

 

2,395

 

 

 

9,018

 

 

 

6,140

 

 

 

15,307

 

Amortization of intangibles

 

 

1,493

 

 

 

1,492

 

 

 

2,985

 

 

 

3,196

 

Restructuring and abandonment costs

 

 

6

 

 

 

4,846

 

 

 

574

 

 

 

4,846

 

Non-GAAP net (loss) income

 

$

(42,142

)

 

$

5,729

 

 

$

63,968

 

 

$

109,106

 

 

 

 

 

 

 

 

 

 

Reconciliation of net (loss) income per share

 

 

 

 

 

 

 

 

GAAP net (loss) income per share, diluted

 

$

(0.56

)

 

$

(0.24

)

 

$

0.09

 

 

$

0.34

 

Non-GAAP adjustments to net (loss) income per share

 

 

0.22

 

 

 

0.28

 

 

 

0.41

 

 

 

0.49

 

Non-GAAP net (loss) income per share, diluted

 

$

(0.34

)

 

$

0.04

 

 

$

0.50

 

 

$

0.82

 

Weighted-average shares used in GAAP per share calculation, diluted

 

 

123,749,605

 

 

 

127,952,875

 

 

 

128,206,823

 

 

 

132,834,096

 

Weighted-average shares used in non-GAAP per share calculation, diluted

 

 

123,749,605

 

 

 

134,165,207

 

 

 

128,206,823

 

 

 

132,834,096

 

Note: Certain figures may not sum due to rounding

 

 

 

 

 

 

 

 

Reconciliation of Cash Flows (Used in) Provided by Operating Activities to Free Cash Flow

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 30,

2024

 

April 1,

2023

 

March 30,

2024

 

April 1,

2023

Cash flows (used in) provided by operating activities

 

$

(111,244

)

 

$

(112,962

)

 

$

164,157

 

 

$

69,324

 

Less: Purchases of property and equipment

 

 

(10,186

)

 

 

(8,714

)

 

 

(16,263

)

 

 

(23,403

)

Free cash flow

 

$

(121,430

)

 

$

(121,676

)

 

$

147,894

 

 

$

45,921

 

Revenue by Product Category

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 30,

2024

 

April 1,

2023

 

March 30,

2024

 

April 1,

2023

(In thousands)

 

 

 

 

 

 

 

 

Sonos speakers

 

$

187,262

 

$

241,180

 

$

690,273

 

$

780,377

Sonos system products

 

 

49,265

 

 

 

44,091

 

 

 

133,826

 

 

 

158,525

 

Partner products and other revenue

 

 

16,135

 

 

 

18,902

 

 

 

41,432

 

 

 

37,850

 

Total revenue

 

$

252,662

 

 

$

304,173

 

 

$

865,531

 

 

$

976,752

 

Revenue by Geographical Region

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 30,

2024

 

April 1,

2023

 

March 30,

2024

 

April 1,

2023

Americas

 

$

170,187

 

$

196,533

 

$

562,627

 

$

593,097

Europe, Middle East and Africa

 

 

69,356

 

 

 

89,054

 

 

 

261,173

 

 

 

329,494

 

Asia Pacific

 

 

13,119

 

 

 

18,586

 

 

 

41,731

 

 

 

54,161

 

Total revenue

 

$

252,662

 

 

$

304,173

 

 

$

865,531

 

 

$

976,752

 

Stock-based Compensation

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 30,

2024

 

April 1,

2023

 

March 30,

2024

 

April 1,

2023

(In thousands)

 

 

 

 

 

 

 

 

Cost of revenue

 

$

686

 

$

581

 

$

1,340

 

$

1,151

Research and development

 

 

10,419

 

 

 

9,565

 

 

 

19,398

 

 

 

18,716

 

Sales and marketing

 

 

4,972

 

 

 

4,475

 

 

 

8,787

 

 

 

8,588

 

General and administrative

 

 

7,596

 

 

 

6,404

 

 

 

13,506

 

 

 

12,765

 

Total stock-based compensation expense

 

$

23,673

 

 

$

21,025

 

 

$

43,031

 

 

$

41,220

 

Amortization of Intangibles

 

 

 

 

(unaudited, dollars in thousands)

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

March 30,

2024

 

April 1,

2023

 

March 30,

2024

 

April 1,

2023

Cost of revenue

 

$

973

 

$

973

 

$

1,945

 

$

2,158

Research and development

 

 

496

 

 

 

495

 

 

 

992

 

 

 

990

 

Sales and marketing

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

General and administrative

 

 

24

 

 

 

24

 

 

 

48

 

 

 

48

 

Total amortization of intangibles

 

$

1,493

 

 

$

1,492

 

 

$

2,985

 

 

$

3,196

 

Use of Non-GAAP Measures

We have provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles (“U.S. GAAP”), including adjusted EBITDA, adjusted EBITDA margin, free cash flow, non-GAAP gross margin, net income (loss) excluding stock-based compensation, legal and transaction related fees, amortization of intangibles, and restructuring and abandonment costs and diluted earnings (loss) per share excluding stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and abandonment costs. These non-GAAP financial measures are not based on any standardized methodology prescribed by U.S. GAAP and are not necessarily comparable to similarly titled measures presented by other companies. We use these non-GAAP financial measures to evaluate our operating performance and trends and make planning decisions. We believe that these non-GAAP financial measures help identify underlying trends in our business that could otherwise be masked by the effect of the expenses and other items that we exclude in these non-GAAP financial measures. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects and allowing for greater transparency with respect to a key financial metric used by our management in its financial and operational decision-making. Non-GAAP financial measures should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of these financial measures to their nearest U.S. GAAP financial equivalents provided in the financial statement tables above. We define Adjusted EBITDA as net income (loss) adjusted to exclude the impact of depreciation and amortization, stock-based compensation expense, interest income, interest expense, other income, income taxes, restructuring and abandonment costs, legal and transaction related fees and other items that we do not consider representative of our underlying operating performance. We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. We define free cash flow as net cash from operations less purchases of property and equipment. We define non-GAAP gross margin as GAAP gross margin, excluding stock-based compensation and amortization of intangible assets. We calculate non-GAAP net income (loss) excluding stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and abandonment costs as net income (loss) less stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and abandonment costs. We calculate non-GAAP diluted earnings (loss) per share excluding stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and abandonment costs as net income (loss) less stock-based compensation, legal and transaction related fees, amortization of intangibles and restructuring and abandonment costs divided by our number of shares at fiscal year end. We do not provide a reconciliation of forward-looking non-GAAP financial measures to their comparable GAAP financial measures because we cannot do so without unreasonable effort due to unavailability of information needed to calculate reconciling items and due to the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-GAAP financial measures in future periods. When planning, forecasting and analyzing future periods, we do so primarily on a non-GAAP basis without preparing a GAAP analysis as that would require estimates for items such as stock-based compensation, which is inherently difficult to predict with reasonable accuracy. Stock-based compensation expense is difficult to estimate because it depends on our future hiring and retention needs, as well as the future fair market value of our common stock, all of which are difficult to predict and subject to constant change. In addition, for purposes of setting annual guidance, it would be difficult to quantify stock-based compensation expense for the year with reasonable accuracy in the current quarter. As a result, we do not believe that a GAAP reconciliation would provide meaningful supplemental information about our outlook.

Forward Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding our outlook for the fiscal year ending September 28, 2024, our long-term outlook, financial, growth and business strategies and opportunities, growth targets, our product cycle and roadmap, including our anticipated new product launch and the timing thereof, our investments in R&D, profitability and gross margins, the macroeconomic environment, and other factors affecting variability in our financial results. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors, including, but not limited to: our ability to accurately forecast product demand and effectively forecast and manage owned and channel inventory levels; the impact of global economic, market and political events, including continued inflationary pressures, rising interest rates and, in certain markets, foreign currency exchange rate fluctuations; changes in consumer income and overall consumer spending as a result of economic or political uncertainty or conditions; changes in consumer spending patterns; our ability to successfully introduce new products and services and maintain or expand the success of our existing products; the success of our efforts to expand our direct-to-consumer channel; the success of our financial, growth and business strategies; our ability to compete in the market and maintain or expand market share; our ability to meet product demand and manage any product availability delays; supply chain challenges, including shipping and logistics challenges and component supply-related challenges; our ability to protect our brand and intellectual property; and the other risk factors set forth under the caption “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended December 30, 2023 and our other filings filed with the Securities and Exchange Commission (the “SEC”), copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this press release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events. Sonos and Sonos product names are trademarks or registered trademarks of Sonos, Inc. All other product names and services may be trademarks or service marks of their respective owners.

About Sonos

Sonos (Nasdaq: SONO) is one of the world’s leading sound experience brands. As the inventor of multi-room wireless home audio, Sonos’ innovation helps the world listen better by giving people access to the content they love and allowing them to control it however they choose. Known for delivering an unparalleled sound experience, thoughtful home design aesthetic, simplicity of use and an open platform, Sonos makes the breadth of audio content available to anyone. Sonos is headquartered in Santa Barbara, California. Learn more at www.sonos.com.

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